Many cities in the People’s Republic of China (PRC) have grappled with physical and financial challenges in managing water supply and quality primarily because they offer water at highly subsidized rates. To help address this issue, an ADB initiative sought to make water tariffs in PRC market-driven while helping municipal water concessionaires become financially self-sufficient. Despite initial resistance, the project has helped local governments explore tiered pricing systems, gradually raising the profitability of water utilities. It also helped the country improve its reporting of all water supply costs, which in turn, has informed national policy on local tariff guidelines, tariff setting and calculation, and cost recovery methodologies.

This case study was developed by the Asian Institute of Management for the Asia Development Bank.