Conflict between the upstream and downstream residents of four major river basins in Korea has recently intensified. The introduction of a metric-based surcharge for piped water, coupled with environmental regulations, aims to resolve these conflicts. The water surcharge system was introduced both to collect revenue via a levy and to achieve a win–win situation for both upstream and downstream users through two major policy measures: increasing infrastructure investment in wastewater treatment and providing subsidies to upstream residents to compensate for the losses imposed by environmental regulations. A volumetric surcharge is in line with taxation policy as ordinary households are relatively price inelastic. However, the surcharge is an earmarked water consumption tariff for piped water in order to raise revenue, rather than a full-cost based pollution preventive measure. The remaining tasks include the comprehensive reform of the pricing system to promote equity, efficiency and sustainability of water use.

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