As a major beneficiary of the south-to-north water diversion project, Beijing will invest 500 million yuan every year starting 2014 to fund the development in Hubei and Henan provinces, the water sources.

From 2014 to 2020, Hubei and Henan will receive 250 million yuan each from Beijing for ecological economy development, industrial upgrading and environmental protection, according to the municipal aid and cooperation office on Friday.

Some 16 counties and districts from Beijing will partner with another 16 counties and districts in Hubei and Henan on school building renovation, ecological protection, teachers' training, sewage treatment and medical care, according to the office.

Water from the south is expected to flow to water-deprived Beijing later this month.

The middle route of the transfer project will see a massive 9.5 billion cubic meters of water per year pumped through canals and pipes from the Danjiangkou reservoir in central Hubei Province to Henan and Hebei provinces and then to Beijing.

Water from the south will greatly ease Beijing's water shortage. More than half of Beijing's urban and industrial use of water will come from the south as it will receive 1.05 billion cubic meters of water annually.

The city has only 100 cubic meters of water available per person locally, or one-tenth of the United Nations "danger threshold". The underground water level in Beijing has dropped 12.8 meters since 1998 with some 6.5 billion cubic meters of ground water overpumped.