Whisky is for drinking, water is for fighting over, as Mark Twain observed. It is true. Having found itself more often on the losing side of the battle to provide sufficient clean water to the vast and arid northern region, Chinese government resorts to market-driven water pricing to cure its water shortage headache.

The National Development and Reform Commission (NDRC) released a new regulation on the supervision of water pricing on Nov. 13 to clarify what can be included in the cost of water supply and what should not.

The regulation suggested that the price of water should be based on the costs of water supply, which comprise the costs of tapping the water resources, providing the running water, constructing the pipes and treating the sewage.

In addition, it imposed quotas on expenditure on office buildings, salary rises, staff benefits and hospitality expenses, which were also included in the costs of water, and could become uncontrollable if no specific limit was imposed.

The regulation stipulated that the hospitality expenses should not account for more than 5 percent of the annual net profit for companies whose annual net profit is less than 15 million yuan (1.8 million U.S. dollars), and for companies whose annual net profit is above 15 million yuan (1.8 million U.S. dollars), the hospitality expenses should be limited within three percent of the total.

For stuff salary of water suppliers, it cannot surpass the 1.2 times of amount of average salary of employees of other sectors, as the regulation required.

"It is essential to work out a proper pricing regulation to provide clear accounting standards for water suppliers," said Dr. Li Yuanhua, deputy director of the Department of Rural Water Management of the Ministry of Water Resources.

"This will make the price of water match its real cost, remind the public that China suffers from constant water shortages and cultivate awareness of water efficiency among all residents," he said.

Although possessing the fourth-largest fresh water reserves in the world, China, by virtue of its population, has the second-lowest per capita water holdings in the world, averaging about 2,222 cubic meters of water per person, a quarter of the world average.

The unequal distribution within the country makes the situation far more serious: 42 percent of China's population -- 538 million people --in the northern region have access to only 14 percent of the country's water, according to the United Nation's 2006 Human Development Report released in China on Nov. 14 entitled Beyond scarcity: power, poverty and the global water crisis.

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