Abstract: This paper introduces the relationship between the water pricing and the sound operation of the water transfer project.Through the economics analysis of the different water pricing methods,it states the effectiveness of the long term marginal cost water pricing method on the optimized allocation of the transferred water resources.The paper proposes further the water pricing principles for the South to North Water.Transfer Project:to be guided by the long term marginal cost water pricing thinking,to realize the combination of volume water pricing and the volumetric water pricing,to establish a water pricing mechanism with the dynamic readjustment as the supplementary measures,to raise properly the price of the water transferred from South to North,and to ensure the stable transition of the water price in the water receiving areas and the water source structure.