Research On Regulatory Reform Of Water Industry Based On Universal Service

With the deepening of market-oriented reform of urban public utilities, water supply industry,as one of the important, indeed, related to the production and living of the people. Currently, the city public utility market-oriented reforms lead a lot of private capital into the field of water industry. The one hand, it makes the efficiency of water companies, on the other hand it also brings the issue of universal service. There will be a private monopoly instead of a government monopoly, excluding the poor and remote areas, ignoring the universal service obligation of the water industry, and then damaging the poor group’s social welfare, because of The entry of private enterprises. The universal service of water industry is an important part of the protection of the basic living of urban residents. How to guarantee the universal service obligations of the water supply industry to be implemented effectively to protect in the reform process, is the important subjects of academic and regulatory sectors.For the regulator, business efficiency and social welfare are its two regulation goals. In this regard, it as one of the research joins into the framework. The tap water is the most important materials to people’s basic living supplies. Universal service requires that each person has the right to get the consumption of tap water. Therefore, from the perspective of universal service, consumer welfare takes precedence over business efficiency. In This article, it takes urban water industry of china as the research object, combines normative and empirical research methods, and then studies the implementation, impact and effectiveness of universal service of the urban water industry in the perspective of social and economic welfare. This article focused on the following specific issues. Firstly, analysis of the universal service implementation methods, which combines bidding and the universal service fund. Study the relationship between universal service scope and economic welfare with an econometric model. Compare variety of financing options, ways of subsidies and allocation of funds. Trying to find a more reasonable and effective path of universal service implementation. Secondly, study the impact of the universal service regulation to socio-economic welfare with the econometric model. Specific analysis these three elements of the price, yield and penetration of the water industry in the perspective of welfare. Get the results of the three elements of the changes on social welfare. Thirdly, this paper focuses on the affect of the regulation reform on universal service with empirical method. It selects penetration as the indicators of a universal service implemented level, selects the rate of return regulation indicators and entry regulation indicators as regulatory indicators. In this paper, it creates a dynamic panel data model based on the traditional panel data model. And then, it tries to get the direction and impact of the influences.After the study, several important conclusions and policy options were obtained:(1) This paper answers the question that the path of universal service implementation based on the mechanism. Firstly, the negative effect of tax financing is less than it in the fiscal financing, because the demand elasticity on water was small. Secondly, producer subsidy was better than consumer subsidy on the study of improving consumer utility. However, due to the immaturity of the consumer subsidy mechanism, there are many problems in practice. Thirdly, this paper proves that the true costs of the enterprise will be reflected easy if more enterprise participate in the bidding, and the universal service market should be independently operated by only an enterprise. In order to improve the efficiency in the use of the universal service fund, more than one universal service subjects should be bundled multiple to conduct a joint tender.(2) This paper draws the following conclusions based on the study of affect universal service regulation effected to socio-economic welfare. Firstly, socio-economic welfare is not simply increase with the increase of the universal service coverage. There will be a specific coverage make the social and economic welfare maximized in different Situation. The relationships between pipe network coverage and socio-economic welfare was also similar. It depends on the relative marginal cost size of the two markets. Secondly, the pro-poor pricing should be applied in water industry. The method of two-part pricing can achieve an increase in welfare. Thirdly, the social welfare will increase with the production increase in general market. The relationship between social welfare and production depends on the size of the marginal costs and prices of the market in universal service market.(3) Overall, the regulatory reform plays a significant role in promoting the development of urban water industry in China. Regulatory reform has a negative effect to the universal service implementation of the urban water industry in short-term. Regulatory reform of the water industry can indeed promote the development of water industry, thereby increasing the level of universal service. However, the level of economic development is an important factor to determine the universal service conditions. Meanwhile, in order to meet the water demand of China’s rapid urbanization process, we must increase investment and construction of the water industry.Based on the above conclusions, the policy options were proposed. This paper determines the path of implementation of the universal service, and explicit the conditions of improving social welfare in the process of universal service. In order to safeguard the smooth implementation of the universal service, some recommendations were proposed in this paper. Firstly, universal service legislation should be improved. Secondly, a universal service goal of the water industry should be established. Thirdly, the water supply industry generally funds should be brought into the public expenditure range. Finally, a competition mechanism of universal service should be established.