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The role of water pricing for managing water resources iswidely recognized in many areas of the world because of theincreasing scarcity of water resources, a high competition betweenwater uses and environmental degradation. Based on the analysis ofcost of water, this paper explores which types of cost should bereflected in the water pricing enhancing the sustainability ofwater resources. The principle of full cost pricing in which thecost should include supply cost, opportunity cost and externalitiesis proposed as a means to achieve the sustainability of waterresources. In a case study of Beijing, low water price is analyzedas one reason for unsustainable water consumption. Thus waterpricing justified is necessary and pressing. It is proposed tojustify water price in phased manner and eventually towards fullcost pricing. The assessment of impacts on water resources byraising water price shows water pricing could alleviate the conflict between water supply and demand. This paper concludes thatwater pricing can play an effective role in enhancing thesustainability of water resources in Beijing.
