A progressive price scheme (PPS) has been implemented in Shanghai since 2013 in consideration of residents’ ability to pay, and charges are based on the actual water consumption of the residents, in an effort to balance the rational allocation of water resources and the goal of saving water between rich and poor families. In the current work, the effect of the PPS for water use was evaluated based on the water use of 6661 households from 14 communities in Shanghai. It was found that the PPS did not reduce household water consumption when comparing the water consumption per household both before and after the implementation of the PPS policy. To investigate the weakness of the PPS, a principal component analysis (PCA) and a hierarchical cluster analysis (HCA) were conducted to access the relationships between mean household water use and community factors such as housing price, management fees, and the number of parking sites. Moreover, a significant inverted U-shaped curve between housing price and water use was found, which demonstrates that rental households shared by several tenants were the main consumers of residential water, and they were not sensitive to the water price improvement in the PPS due to sharing water prices. Therefore, a proposal was made in this work to increase the proportion of water fee expenditure in the total household income and to use 3% as the benchmark for water affordability. Our results provided a new picture of residential water use in big cities and a method for saving and balancing urban water resources.
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