An overall water-pricing reform that charges tiered prices for household water in urban areas will be launched by the end of 2015, in an effort to encourage people to conserve water, authorities said.

Authorities suggested all cities in the country adopt a three-rate structure, charging more to urban homes that use more water, according to a guideline released by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development on Friday.

The prices will be calculated based on average monthly household water consumption, according to the guideline.

The first tier applies to 80 percent of average consumption and the second tier to 95 percent. The price differential between the three tiers should be no less than 2:3:6, and the differential will be greater in areas where water is scarcer, it said.

At present, esidents in urban areas consume nearly half of the country's total water supply. The water-pricing reform aims to better conserve water resources through economic leverage, according to the commission.

So far, half of the cities in the country have adopted tiered prices for water, it said.

The guideline also said many other countries, such as Japan and Singapore, also use a tiered pricing system for water.

Analysts said the latest move is part of the pricing reforms on resources that were decided during the Third Plenum of 18th CPC Central Committee last year.

"Compared with pricing reform in other sectors, such as petroleum and natural gas, water pricing reform is the easiest. Expenditures on water account for a much smaller portion in households, and the reform is unlikely to add much pressure on inflation," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"The new tiered pricing system will provide a more equitable charging method since many regions are experiencing severe water shortages," said Li Chang'an, a professor of public policy at the University of International Business and Economics in Beijing.

"Besides calling on people to save water, households with great water consumption will bear more financial responsibilities," he said.

Beijing water authorities said on Friday that residents will not pay more for household water in the near future since the study on the city's tiered prices is still under way.

"But the city's water shortage is obvious in recent years partly because of consecutive years of drought and rising population," said Sun Guosheng, director of the Beijing branch of the South-to-North Water Diversion Project office.

The project, the world's largest water diversion, will supply large amounts of water to the thirsty capital by the end of 2014 when it's completed. At present, Beijing needs about 3.6 billion cubic meters of water a year. That will increase to 4 to 5 billion cu m by 2020, Sun said.

Contact the writers at jinzhu@chinadaily.com.cn and zhengxin@chinadaily.com.cn

Zheng Yangpeng contributed to this story.