China’s First Water Conservancy REIT Unlocks Infrastructure Finance

China’s First Water Conservancy Facility REIT: A New Way to Address Water Conservancy Financing Problems

By Dong Liang Shen, Asit Biswas, Cecilia Tortajada 1 September, 2026

Water infrastructure is notoriously difficult to finance commercially – until now. Water experts Shen, Biswas & Tortajada analyse how a new financing model is unlocking private capital for water & public welfare

The Yinhua Shaoxing Raw Water Conservancy Real Estate Investment Trust (REIT), the first of its kind in China, is a new, pioneering way of raising funds in the water conservancy sector through capital markets. The trust was successfully listed on the Shenzhen Stock Exchange on November 8, 2024. The opening price was CNY3.45, a 22% increase from the reference price. During the offline inquiry phase, the project’s effective subscription multiple reached 106, setting a new record for public REIT subscriptions. The subscription multiple for public investors was 235, indicating strong market attention and active participation.

REITs invest in real estate that generate stable cash flows. By issuing shares or beneficiary certificates, REITs pool investors’ funds, which are managed by professional teams to generate returns. These returns are then distributed to investors, effectively securitising real estate. With the increasing global demand for water resource management, the application prospects for REITs in this field are broad.

Successful listing of China’s first water conservancy facility REIT = REITs playing important role in future water resource management projects

The successful listing of China’s first water conservancy facility REIT not only points to new solutions for water conservancy financing but also offers valuable experience for the marketisation of other public welfare infrastructure. In the future, with technological advancements and policy support, REITs are expected to play an important role in more water resource management projects. At the same time, the application of REITs will drive innovation and development in the field of water resource management, fostering greater contributions toward sustainable development goals.

1. Innovative Practices

1.1 Building a Robust Underlying Asset

The underlying asset of the Yinhua Shaoxing Raw Water Conservancy REIT is the Tangpu Reservoir project in the prefecture-level city of Shaoxing, in Zhejiang Province. The successful issuance of this REIT is attributed to the reservoir’s stable long-term operation. Completed in 2002, the reservoir has a total capacity of 235 million cubic meters and a maximum daily water supply of 1 million cubic meters, for a total investment of approximately CNY945 million. The reservoir supplies raw water to Shaoxing and parts of Cixi, Ningbo.

Tangpu Reservoir has been operating safely for 20+ years, making CNY200mn in annual revenues…

…making it reliable as a securitised asset

One of the conditions of issuance of REITs is that the project must have good operational income, with a minimum operational period of three years. The Tangpu Reservoir has been operating safely for over 20 years, with an average annual water supply of over 300 million cubic meters in the past decade and annual revenues exceeding CNY200 million in the last three years.

This stability makes it possible to convert the reservoir’s future operational income into an REIT. The reservoir’s large-scale underlying asset and stable income make it reliable as a securitised asset. Through cooperation with local governments, the project’s managers have estimated the reservoir’s future income, giving investors credible return expectations.

1.2 Innovations in Property Rights Confirmation and Procedure Improvements

The primary conditions for applying for water conservancy REITs are clear ownership and a well-defined asset scope. That is, (a) the sponsor (original rights holder) must legally have the property’s ownership and operational income rights (including franchise rights); and (b) the project company must legally hold the underlying assets of the infrastructure covered by the REIT.

The Tangpu Reservoir, completed in 2002, faced issues common to many older water conservancy projects, such as incomplete investment procedures and unclear property rights. To address these issues, Shaoxing City coordinated efforts across multiple departments, including water resources, natural resources, planning, and construction, to streamline the investment approval process and complete land and building surveys. In the course of a year, the city successfully registered the property rights for 1,474.07 hectares of land and nearly 270,000 square meters of buildings, and was granted 13 construction planning permits.

Shaoxing has registered property rights for 80% of its reservoirs as a national pilot

This collaborative approach to resolving historical issues could inform the marketisation of other water conservancy assets. Shaoxing City has also used the process of property rights registration as an opportunity to improve the registration process itself, completing property rights registration for 465 reservoirs (over 80% of all the city’s reservoirs). This has laid a solid foundation for revitalising existing assets, making Shaoxing a national pilot for reservoir property rights registration.

1.3 Separating Public Welfare and Operational Functions

Shaoxing has innovated in separating ownership from operational rights regarding the Tangpu Reservoir.

Gov’t retains public welfare functions…

…project company has 30-yr franchise for water supply & sales…

This protects public welfare and enhances the efficiency of market-oriented asset operations. The government retains public welfare functions such as flood control and water dispatch, while granting the project company a 30-year franchise for water supply and sales. After the franchise period, the original rights holders, such as the Shaoxing Raw Water Group, can reclaim full ownership of the reservoir without compensation.

The public welfare functions were under the government maintaining control over dispatch, operation, and management, and with priority given to flood control. The original rights holders have also signed a joint action agreement to collectively subscribe to 51% of the REIT shares after issuance, ensuring their control over the fund and the underlying assets. As a result, they have the right to operate the infrastructure.

2. Far-Reaching Impact

The successful listing of this REIT is not just about raising funds. More importantly, the series of innovative practices adopted by the project provides a new model for the marketisation of water conservancy assets. The managers of this long-term public infrastructure project have achieved a win-win outcome by ensuring the public welfare function of water supply along with market-oriented operation and asset securitisation.

2.1 Raising Funds for Major Water Conservancy Projects

The most direct benefit of the REIT issuance is to raise funds for the construction of the Jingling Reservoir in Shaoxing, establishing a virtuous cycle between existing water conservancy assets and new investments.

The Jingling Reservoir is one of Zhejiang Province’s major water conservancy projects of recent years, with a total investment of CNY12.3 billion. The REIT issued 600 million shares, raising nearly CNY1.7 billion, all of which will be invested in the Jingling Reservoir project, accelerating its implementation. Thus, the first phase of CNY338 million has already been used for water conservancy, showing a way to transform projects into assets, assets into capital, capital into funds, and funds into investments.

2.2 Promoting the Establishment of a Water-Related REIT Platform to Integrate Water Conservancy Assets

Zhejiang’s Yinhua Shaoxing Raw Water Conservancy REIT platform has opened a door for the listing of water conservancy assets. In the future, this platform could gradually include qualified water-related assets such as raw water supply, water supply, and sewage treatment.

The REIT integrates related assets worth CNY9bn…

…incl 2 drinking water plants, 1 industrial water plants & 2 sewage plants

Currently, the integration of water-related assets, including one reservoir, two drinking water plants, one industrial water plant, and two urban sewage treatment plants, has been completed, with these assets being worth approximately CNY9 billion. As the first publicly offered water conservancy REIT, its successful listing has significantly enriched the types of infrastructure REIT products, giving investors a greater diversity of investment options. It has also created a notable sector demonstration effect, potentially further promoting the regular development of water conservancy REITs.

2.3 Providing a Fair Value Recognition Path for Water Conservancy Assets

The listing of water conservancy assets requires asset valuation, market inquiry, and secondary market trading; it also provides market-recognised pricing for the intrinsic value of water conservancy assets. This is crucial for guiding effective resource allocation and optimising investment decisions. Also, once such assets are introduced into the market, fund regulators and managers will oversee their operation and management, pushing operating companies to improve their management and promoting the standardisation of that management.

2.4 Promoting the Listing of National Water Conservancy REIT Projects

Promoting the pilot program of water conservancy infrastructure investment trusts will help spur innovation in water conservancy investment and financing mechanisms, meet the financing needs of water conservancy infrastructure construction, and broaden long-term funding channels.

Minister Li emphasised the need to learn from the listing to foster green finance product innovation

On November 28, 2024, following the successful listing of the Yinhua Shaoxing Raw Water Conservancy REIT, the Ministry of Water Resources held a meeting in Shaoxing on promoting national water conservancy investment and financing reform. Minister Li Guoying emphasised the need to learn from the listing to foster innovation in green financial products and services in water conservancy.

Currently, several provinces, including Hunan, Ningxia, Guizhou, Zhejiang, Shaanxi, Yunnan, and Fujian, have proposed water conservancy infrastructure REIT projects. The underlying assets are mainly of three kinds: raw water supply, hydropower generation, or a combination of both.

2.5 Broadening Financing Channels and Promoting Sustainable Development of Water Conservancy Infrastructure

After years of construction, China’s water conservancy sector has accumulated many high-quality infrastructure assets. China has nearly 100,000 reservoirs, with a total storage capacity of over 930 billion cubic meters. However, water conservancy infrastructure construction has long relied mainly on fiscal investment, creating a situation where the sector is “holding a golden bowl but begging for money.”

Although these water conservancy assets are generally public-welfare-oriented, many projects have operational incomes. Effectively revitalising these assets through REITs and other models will significantly reduce the reliance on fiscal investment and expand effective investment in water conservancy. These efforts will broaden social capital investment channels and inaugurate a virtuous cycle between existing assets and new investments.

Further readings

• New Policies to Finance Silt Dams, Protect Soil & Water Plus Cut Emissions – A World First from China – Silt dams built to trap soil runoff also capture a surprising amount of carbon. Dr Shen explains how a new method to account for their emissions savings could finance rewards for carbon, soil & water
• Flood of Opportunities in Ecological Preservation – China’s ecological civilisation is more than ideology but a proven approach to turn climate risks into new opportunities. Water policy professors Biswas, Wang & Tortajada show us how
• Key Green Finance Policies to Build China’s Trillion-yuan Water-Savings Industry – By 2027, China’s water-saving industry scale is set to hit 1 trillion yuan. Water experts Shen, Tortajada & Biswas explore how the nation’s innovative fusion of green finance & policy is overcoming financing bottlenecks & what the world can take from its playbook