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In 2015, Hangzhou, a major Chinese city, introduced a water pricing reform. This reform established an unconventional Increasing Block Tariff (IBT) featuring prices set according to annual cumulative consumption and a bimonthly billing cycle. Analyzing data from a household survey and administrative water bills, we detect a small effect on low-use households but find large water savings among high-use households. Moreover, we find strong evidence that high-use households respond to future price while current price remains fixed, and that the small share of households who appear myopic do not respond to dynamic incentives. These findings may inform future efforts to design price interventions in regions facing water scarcity.

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Increasing Block Tariffs and Household Water Savings

  • 章节

  • 发表日期：

    2025年

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  • Li Li

摘要

In 2015, Hangzhou, a major Chinese city, introduced a water pricing reform. This reform established an unconventional Increasing Block Tariff (IBT) featuring prices set according to annual cumulative consumption and a bimonthly billing cycle. Analyzing data from a household survey and administrative water bills, we detect a small effect on low-use households but find large water savings among high-use households. Moreover, we find strong evidence that high-use households respond to future price while current price remains fixed, and that the small share of households who appear myopic do not respond to dynamic incentives. These findings may inform future efforts to design price interventions in regions facing water scarcity.