The Research On The Reform Of The Urban Water Supply Institution

When the 30 years gradual and orderly reform of the state-owned enterprise has made great achievements, the reform of the urban public utilities (including the urban water sector) has been lagging behind.Especially there exists many problems in the institutions of the urban water supply industry.Entering the new century, with the increasing of the urbanization,the increasing urban population and serious pollution, China is facing an increasingly serious water crisis, iri the total 600s cities in the country, more than 400 cities has the problem of water supply shortage, the situation is more serious in 110 cities. At the same time, there exists a low operational efficiency, pipeline network outdated and serious water slips in urban water industry. For urban water supply industry has not adapted to China's rapid economic development,in 2002, China launched the institution reform of the water industry,7 yeas has passed, the reform of the water industry has achieved some achivements, the ability of the water suplly has been improved at a certain extent;but the ratio of the enterprises which had a loss increase from 10% to 70%.The reform has met a serious challenge.This article research the economic performance of urban water industry and its process of institutional change from the New Institutional Economics.First of all, Establish the research framework based on the theories of the modern new institutional economics, use property rights,transaction costs as the research variables to explain the institutional changes of the urban water supply industry.Second, discusses the development of China's urban water in the history and analyze the current economic performance of China's urban water industry.Conclusion 1:from the data we can see that the water industry and state holding enterprises in China have very poor performance, while private and foreign companies performe better. Again, explain the conclusion l,from the new institutional economics analysis of the state-owned and state holding enterprises, we find that the poor performance of urban water business is mainly caused by inefficient public ownership and high transaction costs.Finally, using the theory of institutional change to explain why the reform in urban water sector lagged behind in last century and why the reform accelerated entering 21 century. Conclusion 2:reform lagged behind mainly due to the government s measurement of benefits and costs of the reform, the cost may be high while the benefits is low; reform accelerated mainly due to changes in relative prices, the accumulated knowledge of reform and pressure on government finances.