Journal of Environmental Management 327 (2023) 116880

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Journal of Environmental Management

journal homepage: www.elsevier.com/locate/jenvman

Research article

A water pricing model for urban areas based on water accessibility

Lili Xu a, c, Zhenfa Tu a, c, Jian Yang d, Chenlei Zhang a, Xiaoxu Chen a, Yinxue Gu a,
Guangming Yu a, b, *
a
College of Urban and Environmental Sciences, Central China Normal University, Wuhan, 430079, China
b
College of Life and Geographic Sciences, Kashi University, Kashi, 844000, China
c
Key Laboratory for Geographical Process Analysis & Simulation of Hubei Province, Central China Normal University, Wuhan, 430079, China
d
Faculty of Resource Environment and Tourism, Hubei University of Arts and Science, Xiangyang, 441053, China

A R T I C L E I N F O A B S T R A C T

Keywords: Water resource, with properties of scarcity, is one of the vital resource endowments. Like land resources, the
Water price prices of these resource endowments should be correlated to their locations to follow fair and reasonable
Water accessibility principles. The current water price systems are mainly policy-oriented fixed regimes. And the water use was
Citizen water use
charged according to the regional-average situation with scarce consideration of the fine-scale geographical
SHRD model
Han river basin
water accessibility. With a combination of the water accessibility and the current water pricing regime, this paper
first proposed a novel water pricing model, the Water Price at Grid-scale (WPG) model, to dynamically allocate
water prices to fine grids for urban residents. The WPG model was examined in the case study of the Han River
Basin in the Hubei province of China. The specific results were: (1) the Pgrid of Tier I is between 0.66 and 3.94
yuan/m3, the Pgrid of Tier II is between 0.57 and 5.44 yuan/m3, and the Pgrid of Tier III is between 0.47 and 6.94
yuan/m3 in the study area. (2) the grids with more water acquisition generally have lower water prices than
others and vice versa. (3) the average water prices in tiers obtained by the WPG model are generally higher than
that derived from the current water pricing system. The results proved that the proposed WPG model spatially
allocates the three-tier water prices into grids of urban areas. The WPG framework can be adopted in any society
by involving its water price regimes and adjusting the scale of grids and the pricing year. This study provided a
new viewpoint of domestic water pricing involving fine-scale water accessibility. The WPG model has great
potential to ease water shortage pressure in water-limited societies and can be utilized and loaded into the
current smart-city network for efficient and fine-scale water resource management.

1. Introduction pricing processes are the properties of scarcity (Krautkraemer, 2005;

The use policy of the natural resource endowments is widely related
to fair and reasonable principles and would influence social de­
velopments (Ma et al., 2021). Rational uses of these resources are of
significance to the conservation and sustainable utilization of these
valueless assets (Auty, 2003; Yang et al., 2020), and would contribute to
the development of the economy in both direct and indirect ways
(Aggarwal and Elbow, 2006; Aidam, 2015; Ascher and Healy, 1990;
Rosa and Mariana, 2012).
How does the rational usage of these resources be achieved? One of
the most effective guided policies is resource pricing. However, the
processes of resource pricing are still challenging because the resource
endowments have inherent and complex attributes (Jordan et al., 2010;
Tietenberg and Lewis, 2018). The most acknowledged ones in the
Scoones et al., 2014; Smith, 1980) and immobility (Krautkraemer, 2005;
Scoones et al., 2014; Smith, 1980), which determine the finite stocks and
uneven geographical distribution of these resources. These properties
indicate the importance of location attributes in resource pricing.
Geographic location and geographical accessibility of resources still
influence their price or taxes from the perspective of conventional
economics (Allcott and Keniston, 2018; Sandbu, 2006; Solow, 1974). In
the classical case, the importance of location in land rent is emphasized
in the Location theory (Shieh, 2003). However, it’s very pity that the
location attributes are rarely considered in the current water price
regimes.
Water resource, one of the vital natural resource endowments, pro­
vides valuable and fundamental support and services for all living be­
ings, especially the human culture systems (Kejser, 2016; Hoyos and

* Corresponding author. College of Urban and Environmental Sciences, Central China Normal University, Wuhan, 430079, China.
E-mail address: yu_guangming@163.com (G. Yu).

https://doi.org/10.1016/j.jenvman.2022.116880
Received 14 June 2022; Received in revised form 7 October 2022; Accepted 23 November 2022
Available online 26 November 2022
0301-4797/© 2022 Elsevier Ltd. All rights reserved.
L. Xu et al.
Artabe, 2017; Yu et al., 2017). Pricing water is one of the most important
aspects that concerns all societies (Jihad, 2009; Expósito and Berbel,
2017) especially in the context of climate change (Flombaum et al.,
2017; Abbas et al., 2022) and water shortage (Abbas and Kousar, 2021).
Rational water pricing is crucial for balancing the supply and demand of
the water resource endowment (Bathla, 1999) and therefore benefits the
sustainable management of water resources in practice (Zhao et al.,
2016). However, pricing water still faces challenges (ChettriVenkatesan,
1983; Expósito and Berbel, 2017). Although in different societies, the
property rights of water belong to different parties (Cavaliere et al.,
2017; Luckmann et al., 2016) with different water price systems and
pricing models (Hoyos and Artabe, 2017; Toan, 2016), several
well-acknowledged aspects are commonly considered in water pricing
such as direct cost, environmental cost and resource cost (Molinos-Se­
nante and Donoso, 2016; Zhao et al., 2016). In addition, differentiated
pricing strategies were widely accepted in the two-part tariff system to
consider the differences in households, water sources (Luckmann et al.,
2016), water utilities (Cavaliere et al., 2017), and cities (Kanakoudis
et al., 2016). However, water accessibility, one of the most important
properties in location attributes, is scarcely involved in the current water
pricing systems (Zhao and Chen, 2008). It is necessary to build a water
price regime with location attributes based on water accessibility.
Many studies tried to include the local water scarcity level into their
water pricing model by using an evaluating indicator of water resources,
the water availability (Ruijsa et al., 2008; Sahin et al., 2018). However,
the term ‘water availability’ (ESCAP 2011) is linked with the
regional-average performance in practice. It is unable to be used to
determine the spatial differentiates in terms of water resource supply
(Yu et al., 2017). A new evaluating indicator of water resources, the
water accessibility, is proposed to describe the degree of difficulty in
accessing water at any point (grid) from a natural river network (Yu
et al., 2017). Water accessibility is more powerful than water avail­
ability in differentiating water supply at point (grid) scale. It therefore
provides the foundation for building a water price regime with location
attributes at grid scale.
The scientific questions of this paper are as follows: can we endow
with location attributes to water price and how to conduct it? To answer
these questions, the research objectives of this study are: 1) to propose a
new water pricing model to obtain grid-scale water price with consid­
eration of their geographic location and the geographical accessibility of
water resource; 2) to examine the practical ability of the WPG model in a
watershed area. The Water Price at Grid scale model (the WPG model),
for urban water users, was proposed with comprehensively considering
both the local water accessibility and the existed water pricing strategies
in this paper. As a case study, the Han River Basin within the Hubei
province of China (Yu et al., 2017) is chosen to examine the practical
ability of the WPG model. In the case area, the urban areas were
determined by Nighttime Lights and Vegetation Index at first, then the
urban residential water prices were calculated using the WPG model,
and finally, the prices derived from the WPG model were compared with
the current local water prices. The WPG model, as well as the case study,
shed new light on the urban water pricing system. Our study provides a
unique perspective on monetarizing the water resource endowment. It is
therefore meaningful for the decision-makers of water management in
societies with various property rights statuses.
2. Principles and methods
2.1. Basic hypothesis
(1) The location attribute should be considered in water resource
pricing for fair and reasonable use of the resources endowment.
Based on the Sustainable Development theory, water resource
management should consider the efficiency, equity, and sustainability
(Deng et al., 2022). The water pricing system should consider the fair
2
Journal of Environmental Management 327 (2023) 116880
and reasonable use of water resource. The current water pricing models
tried to build water price schemes from different perspectives such as
efficiency, equity, financial status and simplicity (García-Valiñas, 2005;
Veettil et al., 2011), the political influences (Cooper et al., 2014), the
income distribution (Ruijsa et al., 2008), water sources (Luckmann
et al., 2016), water utilities (Cavaliere et al., 2017) and so on. But the
fundamental property, the location attribute, is scarcely considered in
the water price schemes. As a natural resource endowment, tradition­
ally, the geographical accessibility of water resources is one of the key
determinants of their belonging rights and further monetary value. For
instance, in the pre or earlier colonial era, the natural resource en­
dowments are open access. The property rights and the pricing power of
these assets were controlled by the local lord, capital, enterprises, or
industrially advanced colonist who could easily geographically access
and discover them. With the acceleration of commercialization, these
primary states of property rights draw more ownership, wealth, and
political and social influence. Hence, the location attributes should be
considered in water pricing to represent the fair and reasonable prin­
ciples as the convention of use for resources endowment.
(2) Water price with location attributes is related not only to distance
but also to many natural and anthropogenic factors.
There are many spatial differences in the utilization of water re­
sources, and these differences determine the water price to a certain
extent. In fact, various natural (the water yield, distance, slope, soil,
topography, etc.) and anthropogenic factors (the irrigation works,
technical level, capital and water use policy, etc.) would lead to these
differences. But it is very difficult to build a composite model to intro­
duce all these factors. By the maneuverability, a model of water acces­
sibility, the SHRD model, is developed to describe the basic differences
in water resource use at grid scale (Yu et al., 2017). In this study, the
SHRD model will be used to build a new water price model with location
attributes at grid scale.
(3) The water pricing model with location attributes should be
combined with the current water price regime to accomplish
exercisable targets.
How to build a rational water pricing model, in which the location
attributes of water resources are considered, and the ability of practical
usage is well ensured? A new water price model with location attributes,
the Water Price at Grid scale (the WPG model), was developed in this
study. In the WPG model, the SHRD model (Yu et al., 2017) is chosen to
describe the location attributes. By the combination of the SHRD model
with the current regional water price regime, the WPG model then could
be able to practically reallocate regional-scale water prices to each grid
within the same administrative area. Eventually, a dynamic fine-grained
water price network is therefore formed for smart water resource
management from local to a national extent. In the following parts of
this section, we introduced the current residential water price regime in
our study area, the SHRD model, and eventually the WPG model in turn.
Note that since there are great differences between urban residential
water consumption and agricultural water consumption (Lu et al., 2018)
in ways of access, water pricing rules, sewage treatment, etc., we only
examined the WPG model specifically on domestic water consumption
in urban area in this study.
2.2. The local residential water price regime in China
The residential water price is currently regulated by both the local
and central government but charged by the agent utilities in China. The
water price, with a tiered-tariff structure, is defined as the price of water
resources used by urban residents and households. The water pricing
regimes in different administrative areas have differences: the majority
with three-part tiered water pricing scheme and some others with two-/
L. Xu et al.
four-part tiered ones. Regardless of the number of tiers, the basic con­
siderations of the current regional residential water price (Pres) include
two parts as Equation (1): the water supply price (P1) and the domestic
sewage treatment fee (P2).
Pres = P1 + P2
The sewage treatment fee is fixed but the water supply price would
increase with the increasing water consumption which is the driver of
the upward changing with the water price tiers. In the current water
price regime, the P1 is determined by three aspects (Equation (2)):
P1 = C + M + T
Where, C is the regional water supply cost; M is the profit of regional
water supply; T is the tax to be paid for regional water supply. Theo­
retically, the M and T are linked with the local market, as well as the
financial situation of the local/central governments. While, the C is
determined by water production cost, water transmission and distribu­
tion cost, management cost, and the leakage rate of the regional pipe
network.
Generally, P1 is a resilient value. In the two-part tariff, P1 is obtained
by summing of the basic water price (P3) and the metered water price
(P4) as Equation (3). The tiered water pricing is determined by the
resilient P4.
P1=P3+P4
For a specific household, the domestic water price (Pres) therefore
could be also described as Equation (4) with consideration of Equations
(1) and (5).
Pres = P2 +P3 + P4
The above Formula is a generalized situation for calculating resi­
dential water prices in current water price regime. Since P4 might be
different for different households according to their monthly water
consumption, the household Pres would be different from one to another
in fact. In the widely used three-part tiered water pricing scheme, P4
could be divided into three classes by two standard thresholds: the
minimum (tmin, m3) and the maximum (tmax, m3) of regional mean water
consumption for households. The partitions of tier classes are corre­
sponded to: Tier I with the water consumption [0, tmin), Tier II with [tmin,
tmax), and Tier III with [tmax, ∞). By the survey with the current urban
water prices in different Chinese cities, the tmin , the tmax , and the P4 are
diverse according to different local policies in practice.
2.3. The SHRD model
With an assumption (Yu et al., 2017), four factors were introduced
the SHRD model to express the water accessibility: the slope (S), the
height difference (H), the runoff (R), and the distance (D). The SHRD
model describes the spatial-temporal changes of the water accessibility
for each location at grid scale as follows:
∏
4 accessibility.
A= Ai =aea1 S+a2 H+a3 R+a4 D
i=1
where A denotes the comprehensive index of water accessibility, the
SHRD index; the parameters S, H, and D could be derived by further
surface analysis of the DEM data; the parameter R refers to the runoff of
the water retrieved river and can be determined by the observed data
and the river network; a is the regional fitting coefficient; a1, a2, a3, and
a4 are the coefficients of S, H, R, and D, respectively. More detail of the
SHRD model can be found in our previous work (Yu et al., 2017).
2.4. The WPG model
The first research objective of this study is to propose a new water
Journal of Environmental Management 327 (2023) 116880
pricing model to obtain grid-scale water price with consideration of
geographic location and the geographical accessibility of water
resource. As described above, the WPG model was designed to allocate
water prices into a grid-scale by combination of the local regional water
price regime with the SHRD model. It can be described as Equation (6)
(1)
( Ζ − А)
Pgrid = 1 + P1 + P2 (6)
А
where Pgrid is the refined water price calculated by the WPG model; A is
the SHRD index; Z is the median value of regional SHRD indexes; P1 and
P2 respectively denotes to the water supply price and the domestic
(2) sewage treatment fee in the current water price regime, according to
Equation (1).
In practice, since the P1 and P2 are presented at the regional scale,
they are needed to be converted into raster format with the resolution of
the SHRD index. The data fusion processes of the P1 and P2 and the SHRD
index run on the GIS platform. The workflow of the WPG model is shown
in Fig. 1.
Theoretically, the refined grid-scale water price, which derived by
the WPG model, would have a negative correlation with its grid-scale
water accessibility, and meanwhile was positively determined by the
existed residential water price regime. In addition, the differentiated
water price can be obtained by consideration of the water acquisition
differences between local sites and the regional average status. If the
(3) grid-scale SHRD index is higher than the regional median SHRD index,
the grid-scale water price would be lower than the regional average
status, vice versa.
3. Case study and model examination
(4)
3.1. The study area
The second research objective of this study is to examine the prac­
tical ability of the WPG model. Here we chose a study area within the
Han River Basin to conduct the model examination. The Han River, the
largest tributary of the Yangtze River, located in central China. The total
length of this river is about 1557 km with a watershed area of 1.59 ×
105 km2. The river origins from the Qinling Mountain area and con­
verges to the Yangtze River in the Wuhan city, the capital of Hubei
Province. In this work, the middle and lower reaches of the Han River
basin, which located within the extent of Hubei province, were chosen as
the study area (Fig. 2). This region includes 19 administrative areas such
as Tianmen, Qianjiang, Xiantao, Wuhan, etc.
Due to the uneven temporal-spatial distribution of the local climate
condition, as well as the complex topographical environment in this
region, the natural river network is relatively dense, and the water
system is therefore well-developed. The spatial heterogeneity of the
water resources is caused by the differences of the local terrain condi­
tions. The northwest of the study aera is a mountain area with relatively
less river stream and lower water acquisition. The central and southeast
areas have relatively more river stream and therefore higher water
(5)
3.2. Data and data processing
3.2.1. Data sources
In this study, the Atlas of the Yangtze River Basin (1: 1,000,000) and
the Atlas of Hubei province (1: 770,000) were firstly scanned. These
scanned digital maps were then geometric corrected and vectorized on
the GIS platform to obtain the shapefiles of the whole Han River Basin
and the Hubei province. The shapefiles were overlaid to obtain the map
of the study area with administrative counties.
This map was then used to be linked with the statistical data, and also
used as the mask layer to obtain the DEM information of this study area.
The original DEM data, as well as the Landsat TM (2010) images and the
3
L. Xu et al. Journal of Environmental Management 327 (2023) 116880

Fig. 1. The framework of this study.

Fig. 2. Terrain, water system, and administrative areas in the study area.

NDVI images covering the study area were obtained from the National
Earth System Science Data Center (http://www.geodata.cn/). The
Nightlight -time images, cloudless and stable Global DMSP-OLS Night­
time Lights data were collected from the National Geophysical Data
Center (https://www.ngdc.noaa.gov/eog/download.html). The grid-
scale SHRD index of our study area was prepared by our previous
study (Yu et al., 2017). The map of SHRD index is constructed the fine
grids with resolution of 90 m × 90 m. Therefore, the vector map of
regional water price was then converted to raster layers with the reso­
lution of 90 m × 90 m. The remote sensing images were all resampled
with the same resolution as well. The statistical datasets included the
current residential water price, the current water supply price, and the
current domestic sewage treatment fee, in different administrative
counties. The statistical datasets were collected from various sources
such as the local price bureaus, the local Development and Reform
Commission, the agent utilities, and so on. The current water supply
prices in 19 administrative areas were shown in Table A.1 in appendix A.
3.2.2. Obtain the urban grids
This study only focused on examining the WPG model in the urban
residential water pricing system, so it is necessary to determine the exact
urban areas at first. The main three steps are outlined to determine our
urban grids using the Nighttime Lights data and the NDVI data as
follows.

4
L. Xu et al.
First, the nighttime luminosity value of each grid can generally
reflect the economic and human activities within the grid (Bruederle and
Hodler, 2018; Li et al., 2016). However, the oversaturated and the
spatial overflow issues in the Nightlights data were observed. The NDVI
datasets were used to further correct the above preliminary urban grids.
Usually, the low NDVI value indicates the sparse and weak vegetation
coverage, then the likelihood for the existence of built-up area is
therefore large. Thus, the NDVI can determine the urban area in many
previous studies (Xu, 2007; Zheng et al., 2021). The correction process
follows Equation (7).
DA = (1 − NDVI) × DN (7)
where DA and DN are the corrected value and the preliminary luminance
value for a specific grid, respectively. By this, the oversaturate and the
spatial overflow issues in the Nightlights data were addressed.
Second, the threshold of 50 was used to determine the preliminary
urban grids based on the corrected nighttime luminosity value. The
threshold of 50 is generally set according to the previous experience (Xu
et al., 2020).
Third, the urban areas derived from the above processes were
intersected with the local land cover map to obtained more accurate
urban grids. The land cover map is interpreted with supervised classi­
fication in ENVI software based on the Landsat-8 OLI images in the same
study year. Eventually, we defined the result from the intersect process
as the urban grids, i.e., the urban areas (Fig. 3).
4. Results
4.1. The water accessibility
In the study region, the SHRD model with the fitting coefficients (Yu
Fig. 3. The urban grids in the study area.
5
Journal of Environmental Management 327 (2023) 116880
et al., 2017) are shown as follows.
∏
4
A= Ai = 0.330169e− 0.037S− 1.191H+0.063R− 0.114D
(8)
i=1
Fig. 4 shows the distribution of the SHRD index at the grid scale with
the resolution of 90 m × 90 m in the urban area. The SHRD index
changed between 0.00055 and 4.24 in the Han River Basin, with a
generally increasing pattern from the northwest to southeast (Fig. 4a).
The results indicated the degree of water acquisition difficulties
decrease generally from the northwest to southeast. Basically, the
mountain areas in the northwest areas are hotspots with relatively low
SHRD index, while the plain areas in the middle and southeast area are
hotspots with relatively high SHRD index. The results are reasonable
since they are coincidental with the survey on the local residential
situation.
The SHRD index changed between 0.023 and 0.35 in the urban grids
(Fig. 4b). The SHRD indices in most urban grids were relatively low,
comparing with the grids alongside the mainstream (the Han River) in
the study area. But the SHRD indices were relatively high in these grids,
comparing with in the grids located in the northwest mountain areas. It
indicated that urban grids generally have lower water acquisition than
the areas aside the river but have higher water accessibility than the
northwest mountain areas with low economic development level. These
results are coincident with the fact that the cities are usually located
neither in the area with the richest water acquisition and the largest
flooding possibility nor in the area with the poorest water acquisition
and the harshest environments for living beings. Meanwhile, the urban
grids do not have the exact same SHRD indices, some urban grids located
in the southwestern area, such as Jinmen and Qianjiang, were obviously
lower than other urban grids. It indicated that different urban grids
indeed have different degrees of water acquisition.
L. Xu et al. Journal of Environmental Management 327 (2023) 116880

Fig. 4. The SHRD index in the study area (a) and the urban grids of the study area (b).

4.2. The Pgrid in the study area distribution of water price for the Tier I (0.66–3.94 yuan/m3), the Tier II
(0.57–5.44 yuan/m3), and the Tier III (0.47–6.94 yuan/m3) in our urban
Since the Pres is a three-part tiered water price, the improved Pgrid is grids, respectively. Generally, the distribution of three-tiers Pgrid follows
also shown as three tiers. Fig. 5(a1), (a2), and (a3) demonstrated the the same laws from Pres. To specific, for majority areas, the Pgrid of the

Pgrid (Yuan/m3)

Fig. 5. The distribution of three-part tiered Pgrid.

6
L. Xu et al.
Tier III is higher than the Tier II, and the Pgrid of the Tier I is the lowest
one. However, the novelty and the advantage of the proposed Pgrid is that
our water price is fine-scale and would not be restrained by the
administrative boundary.
As shown in Fig. 5(a1), (a2), and(a3), the grids located in the north
part of the study area generally indicated lower Pgrid than that in the
other areas. For instance, the Pgrid in most grids of Nanzhang are less
than 1.65 (light blue color) in the Tier I. Even in the Tier III, the Pgrid in
most grids of Nanzhang are between 2.49–3.94 (orange color), which is
far lower than the other areas. But the Pgrid in most grids of Qianjiang
and Jingmen are generally larger than another area in all three-part
tiered water prices.
The refined water price is mainly related to the water accessibility of
each specific grid. Basically, the closer to the river network, the lower
the Pgrid, vice versa. Fig. 5(b1), (b2), and(b3) well demonstrated that
although the metered water prices in the three tiers are all increased, the
spatial distribution of water price in the Zaoyang city area in each tier all
shows the same law, i.e., the closer to the river network, the lower Pgrid
because of the higher water accessibility. Fig. 5(c1), (c2), and(c3) in the
Baokang city area show the same above characteristics.
Note: a1~a3 denote the three-part tiered Pgrid in the urban grids of
study area; b1~b3 denote the three-part tiered Pgrid in Zaoyang city area;
c1~c3 denote the three-part tiered Pgrid in Baokang city area.
4.3. The differences between Pres and Pgrid
We built an index, the Diff, to evaluate the difference between Pres
and Pgrid. The Diff is calculated as Equation (9).
Diff = Pres - Pgrid (9)
Fig. 6 shows the average Diff(s) of the water price are all positive in
the Tier I and the Tier II, which indicates that the Pgrid is generally larger
than the Pres in the urban grids. For the water price in the Tier III, the
regional-average Diff is negative, which means that the Pgrid of the Tier
III in the newly proposed water price system is generally lower than the
current water price. Since the Tier III is corresponded to the households
with high water consumption, we can conclude that the average water
prices obtained by the WPG model in tiers are generally higher than that
in the current regional water pricing system for most households.
5. Discussion
5.1. Water price policy and its significance
As other natural resources endowments, the water resource inher­
ently has the attribution of scarcity (García-Valiñas, 2005). Water
shortage is one of the most challenging problems for almost all the
countries on the planet (Hoyos and Artabe, 2017; Takatsuka et al.,
2018). As soaring worldwide water demands with the increasing pop­
ulation (Chen and Yang, 2009; Diakité et al., 2009), a water pricing
Fig. 6. The histogram of Diff in three-part tiered water price: a) the Diff in the Tier I water price; b) the Diff in the Tier II water price; c) the Diff in the Tier III
water price.
7
Journal of Environmental Management 327 (2023) 116880
policy, an effective water management tool, is crucial for balancing the
supply and demand of the water resource endowment (Bathla, 1999;
Zhao et al., 2016), especially in urban areas (Binet et al., 2014; Chen and
Yang, 2009). A rational domestic water pricing strategy benefits water
conservation in practice. It contributes to effective regulation and
management of water resources and is of significance for easing pressure
from water shortage and better achieving the sixth goal of sustainable
development, i.e., Clean Water and Sanitation.
Although several studies tried to include local water scarcity level to
improve water pricing models (Ma et al., 2014; Ziolkowska, 2015), they
limited to calculate the regional-average water availability which is a
panel dataset to coincidence with the administration units. As a result,
these models were restrained by the current zonal-regulated water
pricing paradigm. Furthermore, all the sites within a specific adminis­
trative unit would share the same billing standard in the current water
pricing paradigm. In other words, the users located in the river aside
might be charged the same billing standard as which located far away
from the river. This price regime is going against with the principle of
equity for water sustainable development. Even within the same
administrative unit, the water use billing standards should be various
according to their geographical accessibility of water resource.
Many water pricing models focused more on the social attributes of
the water resources, with pursuing for ‘user-friendly’ water price pol­
icies in terms of the ‘demand’ side. While our work proposed a novel and
unique perspective on endowing with the location attributes to the
water prices. This water price essentially involved the inherent natural
attribute from the ‘supply’ side, the geographical accessibility of the
water resources. For water users at a specific location, the geographical
accessibility of the water resources determines the proximity of the re­
sources and the difficulty of obtaining resources. Hence, the water
accessibility should be well considered in the process of monetarizing
water resources. Based on the idea, the WPG model is developed in this
study. The WPG model, consideration of the location attributes of the
natural resource endowments in their pricing processes, is reasonable
and can express the fair and reasonable principles.
5.2. The Pgrid in urban grids
As shown in the case study, the Pgrid derived by the WPG model
spatially allocates the three-tier water prices into the urban grids ac­
cording to their water accessibility. On the one hand, the three-tier
Pgrid(s) kept the elastic regimes inherited from the current water pric­
ing system. On the other hand, each tier of Pgrid shown capacity of
spatially differencing prices corresponding to the geographical accessi­
bility. Specifically, in Fig. 5a, (b), and(c), the Pgrid of the Tier I is
differentiated in overall urban grids at grid-scale with prices changes
between 0.66 and 3.94 yuan/m3; the Tier II between 0.57 and 5.44
yuan/m3, and the Tier III between 0.47–6.94 yuan/m3.
Compared with the current water prices shown in Appendix
Table A1, the Pres of the Tier I is differentiated with price changes
L. Xu et al.
between 2 and 2.6 yuan/m3, the Tier II is between 2.58–3.43 yuan/m3,
and the Tier III is between 3.25–5.15 yuan/m3 at regional scale. The
maximum Pgrid in each tier is higher than that of Pres, but the minimum
Pgrid in each tier is lower than that of Pres. These results indicate that the
Pgrid successfully allocates the water prices into different grids according
to their water accessibility. If the grid has the higher water accessibility,
it will have the correspondingly lower water price, even it is within the
same administrative area where other grids might have low water
accessibility.
In addition, the differences among each minimum Pgrid (0.66, 0.57
and 0.47) in tiers are much lower than the differences among each
maximum Pgrid (3.94, 5.44 and 6.94). These results also indicates that
our proposed Pgrid is designed for punishing the grids with low water
accessibility but higher water consumption. The WPG model reasonable
and effective because the result of WGP model is slightly higher than the
Pres and the average domestic water tariff in 36 key cities of China
(Zhong and Mol, 2010), which are very useful for the local government
to fulfill their goals on water conservation and sustainable development.
5.3. The WPG model
By making good use of the SHRD model and the current water pricing
system, the WPG model allocates domestic water prices on both the
‘supply’ and ‘demand’ sides. On the one hand, the WPG model well
treats the water resource as one of the key natural resource endowments
by emphasizing the importance of location and the geographical
accessibility of water resources (Allcott and Keniston, 2018; Sandbu,
2006; Solow, 1974). Specifically, we take advantage of the SHRD model
to obtain the geographical accessibility at grid scale. The consideration
of fine-scale water accessibility in water pricing follows the laws of
scarcity and the immobility of the water resource endowment and
benefits improving water-use efficiency for sustainable water gover­
nance in terms of sustainable development. On the other hand, the WPG
model also includes the fundamental elements from the current water
pricing system such as the water production cost, the water transmission
and distribution cost, the management cost, the leakage rate of the
regional pipe network, and so on. The WPC model keeps the advantages
of the current water pricing system in terms of considering the social
attributes. Theoretically, the WPG model provides theoretical guidance
for the efficient management of water resources by integrating the
sustainable development theory into the water price system. Practically,
the WPG model ensures practicability of the model by linking with the
current water price system, which reflects the actual cost and acceptance
by society.
As a dynamic model, the WPG model is more advanced than the
current water pricing system. The current policy-orientated fixed water
pricing regime is ineffective in the allocation of water resources and
reducing waste, and therefore is incapable of easing the water shortage
issue for citizens (Zhao and Chen, 2008). This regime is a policy-driven
and fixed local regulation tool and hardly to be related to the natural
inter-annual fluctuations of the water resources. A dynamic water
pricing model is rational (Saglam, 2015) because the water demands
would be influenced by the regional climate variability (Hoyos and
Artabe, 2017). The WGP model is a dynamic model because the SHRD
index is influenced by inter-annual fluctuations of the runoff, and can be
changed according to the changed runoff water storage (Bhanja et al.,
2017). Therefore, the output Pgrid of the dynamic WGP model would be
different in different years. Compared with the policy-oriented fixed
local Pres, the dynamic Pgrid is more related to the natural fluctuations of
the water acquisitions, and the principle is coincidence with that in
previous study(Hoyos and Artabe, 2017).
Consequently, the WPG model is more suitable to be used in areas
with high drought possibilities. During the drought years, water acces­
sibility becomes low because of the water shortage, and the citizens
would generally be asked to pay more for their water use from the
perspective of water conservation. The high level of the cost would be
8
Journal of Environmental Management 327 (2023) 116880
efficient to help decrease the water consumption, the important for so­
cial health and the sustainable water management (Diakité et al., 2009).
Therefore, the dynamic WPG model strengthens the urban resilience in
water supply when it faces water shortages and has excellent potential to
be widely used in different water-limited societies.
The fine-scale water price network allied with the WPG model is
useful for smart water resource management. This framework has great
potential to be utilized and loaded into the current smart-city network. It
can be overlaid with the power grid, the transportation grid, the com­
munity management grid, etc., and therefore could provide a powerful
tool to help the city management (March et al., 2017). This grid-scale
water price network is also useful for urban planning. Because it
simultaneously indicates the water accessibility, the water production
cost, water transmission, and distribution cost, management cost, and
the leakage rate of the regional pipe network, it is therefore useful for
urban designers to reasonably plan different urban functional areas, the
pipelines, the water storage hubs, etc.
5.4. Limitations and outlook
This paper proposed the WPG model and examined the model at the
basin scale. Although the work is meaningful for various aspects of
environmental management, some limitations need to be addressed in
the future.
First, an accurate urban areas extent is necessary for practically
charging the domestic water consumption based on the proposed WPG
model. In this paper, we used the remote sensing datasets, i.e., the
Nighttime Lights data and the NDVI data, to define the urban grids.
However, this strategy might have limitations. In the future, more ac­
curate extent of urban areas can be obtained by taking advantage of a
batch of recently proposed remote sensing-based urban area determi­
nation algorithms (Hu et al., 2015; Liu et al., 2019). Meanwhile, in the
future, the extent of urban areas could also be obtained by the central
and local departments of water resource management based on
administration-based investigations.
Second, the proposed WPG model has strong links with the current
water pricing system based on the assumption that the current system is
generally reasonable. It is worth noting that there are different water
pricing plans in societies (Kanakoudis et al., 2016; Suárez-Varela et al.,
2015), such as full-cost pricing (Kanakoudis et al., 2016; Kejser, 2016)
and shadow cost pricing strategies (Shen and Lin, 2017). The current
water pricing regime in the study area might have limitations. For
instance, the current regime seldom considered the resident population
in households and treated households the same no matter it is the nu­
clear family, joint family, or extended family. In these families, large
water consumption would increase their bills and result in deterioration
of their living quality. Besides, the current regime has limitations in
consideration of low-income slum dwellers within urban slum areas. The
urban slum is a common issue in some African and South Asia Countries
and would cause various water issues (Haque, 2018). This drawback
limits the generalizability of the WPG model in use in these regions.
Overall, the limitations that exist in the current water pricing system
would influence the efficiencies of the proposed WPG model. Further
studies could focus on improving the WPG model by refining or adapting
the current regional-based water pricing system when conducting WPG
in different societies.
6. Conclusion
Water resources is one of the vital natural resource endowments and
the resource pricing should follow the fair and reasonable principles in
sustainable development. According to these principles, the location
attributes of the resources should be considered in the water price. To
endow with the location attributes to water prices, this study developed
a new water pricing model, the WPG model, which be implanted an
important location attribute, the water accessibility. Our model and the
L. Xu et al.
case study express a new viewpoints and paradigm in the pricing water,
and this pricing idea can be used to the similar resource endowments.
As a case study of the Han River Basin in the Hubei province of China,
water prices are calculated by the WPG model to get Pgrid for urban areas
in the study area at the grid scale. Results show: (1) the tier classes of
domestic water prices in study area are as follows: the Pgrid of the Tier I is
between 0.66 and 3.94 yuan/m3, the Tier II is between 0.57 and 5.44
yuan/m3, and the Tier III is between 0.47 and 6.94 yuan/m3; (2) the
grids with more water acquisition generally have lower Pgrid than others
and vice versa, the closer to the river network, the lower Pgrid because of
the higher water accessibility; (3) the average Diff(s) of the water price
are 0.43, 0.15, and − 0.21 in the Tier I, Tier II, and Tier III, respectively.
It indicates that the Pgrid is generally lower than the Pres in the urban
grids of our study area. The results also show that the WPG model
provides an efficient way to geographically differentiate the water prices
for urban residents according to their geographical accessibility. It also
proves that the idea of endowing with location attributes to urban res­
idential water pricing is theoretically and practically reasonable. So, it
can be widely used for pricing water in urban areas.
The WPG model, allied with the grid-scale charging/regulation
paradigm, built a grid-scale water pricing network which has great po­
tential to be utilized and loaded into the current smart-city. It is also
useful for the urban designers to reasonably plan different urban func­
tional areas, the pipelines, the water storage hubs, etc. The WPG
framework can be adopted in any society by involving their current
water price regimes and adjusting suitable scale of the grid and the
pricing year. Future practices could conduct efficient water pricing
governance by updating more accurate extent of urban areas using
remote sensing-based or administration-based strategies. Further studies
could focus on improving the WPG model by refining or adapting the
current regional-based water pricing system when conducting WPG in
different societies.
Credit author statement
Lili Xu: Conceptualization, Methodology, Formal analysis, Funding
acquisition, Investigation, Visualization, Writing – original draft,
Writing – review & editing. Zhenfa Tu: Methodology, Software, Formal
analysis, Investigation, Validation. Jian Yang: Data curation, Formal
analysis, Investigation, Validation. Chenlei Zhang: Data curation,
Formal analysis, Investigation, Visualization, Writing – original draft.
Xiaoxu Chen: Data curation, Formal analysis, Investigation, Visualiza­
tion. Yinxue Gu: Data curation, Formal analysis, Investigation.
Guangming Yu: Conceptualization, Methodology, Software, Formal
analysis, Investigation, Visualization, Writing – review & editing,
Supervision.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
Data will be made available on request.
Acknowledgments
This study was funded by the National Natural Science Foundation of
China, China (Nos. 41701474, 41701467, and 42171423), the National
Key Research and Development Plan of China, China (No.
2016YFC0500205), and the National Basic Research Program of China,
China (No. 2015CB954103). The authors are grateful to the anonymous
reviewers for their constructive criticism and comments.
9
Journal of Environmental Management 327 (2023) 116880
Appendix A. Supplementary data
Supplementary data related to this article can be found at https://
doi.org/10.1016/j.jenvman.2022.116880.
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