In China, the three main sources of industrial water are surface water, ground water, and tap water, and the consumption of surface water dominates. The consumption of industrial water by state-owned and large non-state enterprises accounted for 70.18% in 2008. There are varying water rates for surface water, ground water, and tap water. The price for tap water, which consists of resource fee and project and environmental charges, has a significant impact on the demand of tap water while the surface and ground water demands are mainly determined by the resource fee. Thus, rectifying the water price structure in the industrial sectors regarding water resource fee is important for China to achieve the target of industrial water conservation and a water-saving society. Two methods of rectification are provided: one is to revise the level of resource fee and the other is to adjust the rate of resource fee charged on the tap water. When the demand for industrial water is negatively correlated to the surface water resource fee, the impact of the resource fee for surface water on the demand for surface water is larger than the impact on the demand for ground water; the impact of the ground water resource fee on the demand for surface water is larger than the impact on the demand for ground water if the industrial water demand is positively related to the ground water resource fee. Meanwhile, given a negative relation between the industrial water demand and the surface water resource fee, the positive impact of the relative weight of surface water resource fee on the demand offsets the impact of surface water resource fee; if a positive relationship between the industrial water demand and the ground water resource fee holds, the positive impact of the relative weight of ground water resource fee enhances the impact of ground water resource fee on industrial water demand. Based on a panel data of 30 Chinese provinces between 2000 and 2013, this paper uses a simultaneous equation model to analyze the impact of water price structure on the demand for industrial water. We find a substitution effect between the consumption of surface water and the consumption of ground water, and both surface water resource fee and ground water resource fee have large impacts on the demand for surface water demand. Further, the water price structure characterized by the surface or ground water resource fee over the tap water price has enhanced the impact of water resource fee on industrial water demand, which suggests that the demand for tap water could be reduced by cutting down the relative weight of ground water resource fee. In sum, in order to promote conserving industrial water, while it is effective by adjusting water prices and resource fees, rectifying water price structure is more important. Specifically, with the strictest water resource regulations (e.g. the strictest policy of ground water mining), regulators should improve the efficiency of the management of the demand for surface water and increase the relative weight of the surface water source fee and/or reduce the weight of the ground water resource fee.