Residential water demand model under block rate pricing: A case study of Beijing, China

In many cities, the inconsistency between water supply and water demand has become a critical problem because of deteriorating water shortage and increasing water demand. Uniform price of residential water cannot promote the efficient water allocation. In China, block water price will be put into practice in the future, but the outcome of such regulation measure is unpredictable without theory support. In this paper, the residential water is classified by the volume of water usage based on economic rules and block water is considered as different kinds of goods. A model based on extended linear expenditure system (ELES) is constructed to simulate the relationship between block water price and water demand, which provide theoretical support for the decision-makers. Finally, the proposed model is used to simulate residential water demand under block rate pricing in Beijing.