Comprehensive reform of agricultural water prices must be actively and steadily advanced
China is a large agricultural country, characterized by a large population, little arable land, frequent floods and droughts, and sharp contradictions between water supply and demand, which determines that Chinese agriculture must follow the path of irrigated agriculture. Limited by early economic capacity and technical conditions, China's large and medium-sized irrigation districts have problems in operation and management such as low design standards for irrigation projects, low project quality, and incomplete supporting facilities. To solve these problems and promote the sound operation of irrigation districts, it is necessary to consider them comprehensively, make overall arrangements, and advance them in step. To this end, the Ministry of Water Resources proposed building a "trinity" long-term mechanism for the sound operation of farmland water conservancy, based on a sound farmland water conservancy project system, with farmer water-user self-governance as the core, and with a scientific terminal water price system as the guarantee. This is of great significance to national food security, increasing farmers' income and reducing their expenditures, building a water-saving society, and the overall situation of water management system reform.
Reform of terminal agricultural water prices is an inevitable choice for standardizing water prices of terminal canal systems, reforming the agricultural water supply management system, ensuring the sound operation of projects, promoting agricultural water conservation and efficiency improvement, and safeguarding national food security. By implementing terminal water prices for agricultural water supply, the phenomenon of multiple fee collections can be avoided, farmers can have a clear idea and use water with confidence, and it can curb arbitrary price increases and random add-on charges, forming a sound mechanism for water fee collection, which is conducive to the sustainable operation of water conservancy projects and improving the quality of irrigation services.
Analysis of China's agricultural water price policies and water price models
1. Overview of China's agricultural water price policies
Agricultural water price is the transaction price of water as a commodity resource used in agricultural production, such as water for grain crops and cash crops and for aquaculture. At present, agricultural water prices mainly cover water supply costs and expenses, excluding profit and taxes.
The development of China's agricultural water prices has gone through three stages. The first stage was the free water supply stage, that is, the price of agricultural water was zero. The second stage was the low-standard charging stage for agricultural water prices, but agricultural water prices were still far below the cost of water use. The third stage is the partial cost charging stage. The Regulations on the Administration of Water Supply Prices for Water Conservancy Projects, issued in 2003 and implemented on January 1, 2004, marked that China's agricultural water price reform entered the fast track.
Starting in 2008, China launched comprehensive reform of agricultural water prices. In 2013, the Ministry of Water Resources coordinated with the Ministry of Finance to increase support and carried out in-depth demonstrations of comprehensive agricultural water price reform in 55 counties in 27 provinces across the country. The No. 1 Central Document issued in 2015 once again made arrangements for advancing comprehensive reform of agricultural water prices.
2. Overview of agricultural water price models
Overall, water resource pricing models mainly include the following aspects: 1. Pricing based on water supply cost. Separately measure the various inputs incurred for the production and supply of water in raw water supply activities, tap water production and supply activities, sewage treatment activities, and water diversion and other water-related activities, so as to form production prices for various water supply industries. 2. Pricing based on farmers' affordability. Based on conditions such as the level of economic and social development, farmers' income level, enterprise production level, and available water resources in a certain period, determine the acceptable range of water prices for various types of users. 3. Pricing based on market equilibrium relationships. Based on factors such as the level of social and economic development in a certain period, the input-output relationships of production sectors, and the water price elasticity of residential users, construct a virtual market system to evaluate water resource prices under non-market conditions and analyze the equilibrium price of water resources under certain conditions.
Because countries differ in their levels of social and economic development and their water resource endowment conditions, the water price systems they implement and the water price formation mechanisms they adopt also differ. For agricultural irrigation water, the United States adopts a pricing model of "service cost + user affordability." In developing countries such as India, the Philippines, Thailand, and Indonesia, where the national economy is dominated by agriculture and irrigation water consumption is very large, the pricing model usually adopted is one based on water users' affordability.
3. Characteristics of China's agricultural water use services
(1) The service targets of agricultural water use. Agriculture is a weak industry, and water prices should reflect policy orientation. (2) The services provided by agricultural water use have commodity attributes. (3) Since it is impossible to build another irrigation and drainage engineering system within an already built water conservancy project area to compete with it in terms of price and service, agricultural water use services have a certain monopoly nature.
From the above characteristics, China's agricultural water use service projects are different both from purely public welfare flood control projects and from hydropower enterprises that seek profit, so their water prices should not follow a uniform model but should be formulated separately according to different situations. Therefore, China's agricultural water pricing should be considered from two aspects:
On the one hand, the water prices of irrigation and drainage district projects are closely related to input, output, and national macro policies. Therefore, for areas with relatively little investment in agricultural water conservancy projects, good rural economic conditions, and farmers with the ability to pay, the agricultural water price can be raised to the water supply cost plus an appropriate profit. For areas with relatively large investment in agricultural water conservancy projects, relatively poor rural economic conditions, and farmers whose ability to pay is temporarily difficult, on the basis of government financial subsidies, a step-by-step approach can be adopted, appropriately raising the price a little each year, and after various conditions improve, raising the water price to the cost-accounting price. For areas with huge investment in agricultural water conservancy projects, very poor rural economic conditions, and farmers whose ability to pay is truly very difficult, a method combining central government financial subsidies and local government financial subsidies can be adopted to solve the problem that agricultural water supply costs cannot be compensated, and the issue of profit can be considered after conditions mature.
On the other hand, in light of several traditional pricing methods for China's agricultural water use and the current influencing factors on China's agricultural water use, the collection of agricultural water use fees in China should adopt a two-part water price. The essence of the two-part water price is to apply different compensation methods to the fixed costs and variable costs among water supply production costs and expenses, that is, fixed costs are compensated by the basic water price, and variable costs are compensated by the metered water price.
Problems faced by the reform of China's agricultural water price policy
The main current problems are:
First, the challenge to concepts. The use of agricultural water resources has long been unpriced or priced low. The reform of water prices is, on the whole, a "price increase" for agricultural water use. Raising agricultural water prices has been questioned in many ways, posing a great challenge to the recently cultivated concept that "water resources have value."
Second, the challenge of farmers' affordability. Water price reform should remain within the range of farmers' affordability, and farmers' affordability is the upper limit of agricultural water prices. Because agriculture is a weak industry with low returns, against this background, water prices have varying degrees of impact on agricultural production costs, especially during periods of continuous price increases, when farmers' affordability is even lower.
Third, the challenge to the survival of water management units. Water fees are an important source of economic survival for water management units. Because fee collection is difficult, water management units have become "poor temples," and their survival is in crisis, which to a certain extent affects management levels and plants hidden dangers for efficient water use.
Recommendations for the reform of China's agricultural water price policy
Agricultural water prices are not only a water conservancy economic issue but also a very sensitive political issue. They are closely related to the improvement of comprehensive agricultural production capacity and entangled with the interests of farmers and relevant water management units, making them very complex. The reform of agricultural water prices must adopt a prudent, active, and steady principle and be advanced steadily.
1. Strengthen farmers' awareness of water conservation and cultivate understanding of the commodity attributes of water
If the implementation and reform of water price policy are to achieve the expected results, they must gain the support and understanding of the broad masses of farmers. However, free or low-price water use has become a "habit" for many years, which to a certain extent weakens farmers' awareness of water conservation, so it is first necessary to change the conceptual understanding of the broad masses of farming households. Each township and village can invite professionals to explain to everyone knowledge such as water rights and the current status of China's water resources, so that everyone understands the preciousness of water resources. The key targets can be those new-type farmers with a certain educational foundation, and letting them pass these concepts on to other farmers will produce better results. Only after the broad masses of farmers recognize the scarcity of water resources and the commodity attributes of water can the implementation and reform of water price policy play a better role.
2. Do a good job in water price management and standardize the water price policy of terminal canal systems
Agricultural water use is one of the factors of agricultural production. The government pricing catalog should be revised in a timely manner according to the degree of development of the agricultural production factor market, resource conditions, and changes in supply and demand. The water price of terminal canal systems should be included in the scope of government price management, and the water price of terminal canal systems should be verified according to the operation and management costs of terminal canal systems. The terminal water price system of "one price to the household, one receipt for charging" should be actively promoted. Water management units should extend management, supply water directly to farming households, reduce intermediate links, issue invoices to households, increase the transparency of payment, firmly curb arbitrary charges and arbitrary price increases, and effectively solve the problem of unreasonable water fee burdens on farmers. Starting in 2008, China launched comprehensive reform of agricultural water prices. This comprehensive reform of agricultural water prices included the water price of agricultural terminal canal systems in the scope of government management and implemented a terminal water price system of the water price of state-owned water conservancy projects plus the water price of terminal canal systems, standardizing the terminal canal system to a certain extent.
3. Fully consider farmers' affordability and establish an incentive mechanism for agricultural water fee subsidies
The reform of agricultural water prices must remain within the range of farmers' affordability. This is the primary basic principle of water price reform. Relevant departments should, on the basis of fully listening to farmers' opinions, formulate a reasonable standard and use it as the upper limit for agricultural water price reform to guide the reform. At the same time, it is also very necessary to establish an incentive mechanism for agricultural water fee subsidies. The so-called incentive mechanism for agricultural water fee subsidies is a mechanism that combines agricultural water fee subsidies with water conservation to promote efficient use of agricultural water resources. Its specific mechanism is to subsidize agricultural water fees, with the subsidy directly distributed to farmers just like grain subsidies, while at the same time adjusting agricultural water prices, which is conducive to mobilizing the enthusiasm of both water management units and farmers. It is worth noting that the proportional relationship between the adjustment range of water prices and farmer subsidies should be regulated, and farmers' subsidy income should be higher than their expenditure from water price increases. Appropriate places should be selected for pilot projects to establish and improve this subsidy incentive mechanism.