China has launched a tax on water while abolishing the water fee in some provinces. The 40-year-old water resource fee, levied on companies that directly extract water resources from underground, rivers or lakes, is thus retreating into history. 

China's fresh water resources account for 6.4 percent of the world's total, but they support 20 percent of the world's population. However, fresh water resources are not really cherished around the world. 

Economic growth is increasingly straining water resources. In China, 70 percent of its cities are short of water, while 20 percent run serious shortages of water. The annual economic loss stemming from water-related reasons amounts to 300 billion yuan ($46.72 billion). Thus, to protect and better use water resources is an urgent issue for China. 

In 1979, Shanghai began to impose water resource fees, which later spread to the other parts of the country. But the water resource fee is too low to discourage residents and businesses from wasting water. For example, for residents' daily use, every cubic meter of water only costs 0.01 yuan. 

The reason for this extremely low fee mainly lies in the fact that it is local governments that decide the price of water resources. In order to attract investment, local governments are reluctant to impose high water resource fees. Now, the water resource tax, unlike the fee, is a compulsory practice. Users are required to declare the amount of water they have used and they'll get punished if they are found providing wrong data. The fee-to-tax reform is the key to saving precious water resources. 

(This is an edited excerpt of an article published in Oriental Outlook on January 11)