Comparison between Irrigation Water Prices in China and Australia and the Policy Reform of Water Price in China

The existing irrigation water price is too low to regulate the water needs of farmers, neither is it enough to improve the water use efficiency. Australian government improves its water use efficiency and the sustainability of water resources via reforming water price system. There is some research on water price and relative policies in China in recent years, pointing out that the low water price, especially the much lower irrigation water price discourages water saving. In other words, lower irrigation water price can result in the waste of water in most irrigation districts. Till now there is less research on how to set a more rational irrigation water price, which can not only coordinate the balance between need and supply via economic leverage, but also address the actual situation of the farmers in China. In addition, only a little research touches on the water price that can encourage water saving. In this paper, the history of irrigation water price reform in China is reviewed and the main water policy in each stage is introduced. Then, the irrigation water price reform and the ‘cap’ measure in Australia are introduced. Moreover, the achievements, as well as the different influences of the new and old water price policies on water diversion are analyzed. Based on the successful reform results of Australia, a comparison study on irrigation water price system between Zhanghe irrigation district in China and Murray-Darling Basin in Australia is done., It is urged that water price reform is necessary in China, and some suggestions are given. Having considered the existing water price mechanism and the actual situation in the Yellow River Irrigation Areas, we introduce a new calculation method for irrigation water price and suggest the irrigation water price in the lower reaches of the Yellow River Basin. The comparison results and the new method for setting water price can be used as a reference to the water price reform not only in the study area, but also in other irrigation areas in China. It is also indicated that a more reasonable and effective water price policy needs the development of both water rights and water market in China.