Assessing the effectiveness and function of the water resources tax policy pilot in China

Water resources tax is an important means to strengthen the integrated water resources management and water governance. The Chinese government started the Tax-for-Fee reform (Fei Gai Shui) in 2016 and piloted the water resources tax in ten provinces. After several years of practice, it is necessary to evaluate and summarize the effectiveness and impact of the water resources tax policy pilot in China. This study first analyzes the function of the water resources tax, built on the global development of water resources tax review. And then, this study reviewed the evolution of the water resources fee/tax policy in China and evaluated the effectiveness of the water resources tax reform. In addition, this study discussed critical success factors for the water resources tax pilot and analyzed crucial questions for further study. The results show that water resource utilization efficiency improved and water use structure optimized through the water resources tax incentives. This study might contribute toward making reasonable decisions in the water policy and governance fields not only in China but in other developing countries as well.