Abstract: Because of uneven distribution of water resources and increasingly serious water pollution, the inter-basin water transfer project provides a suitable solution not only for many regions that faced the problem of quantitative water shortage, but also for some cities of quality-induced water shortage. However, these huge costly projects often have a giant impact on the eco-environmental quality of the pilotage areas, which means the environmental cost caused by these projects cannot be ignored. This paper focus on the case study——the water transfer project of Qiandao Lake, which transfer water to Hangzhou City, capital of east China's Zhejiang province. Through the methods of questionnaire interview and field research data in the diversion area, Jiande city, we collect 610 questionnaires, among which 596 questionnaires are effective. After that, we analyze the influencing factors of the local residents' willingness-to-pay (WTP) for the diversion project, and estimate the economic losses of environment impact on the pilotage area by contingent valuation method (CVM). Then, we calculate the environmental cost of the project in the construction period, based on residents' WTP of the diversion area, Jiande city. The result shows that the WTP for recovering and improving the destroyed zoological environment is about 377.6-542.1 yuan per person annually. The result shows that the environmental cost of diverted water,based on 978 million cubic meters total water transfer quantity proposed annually, is about 0.15-0.21yuan per ton, and totaling about 580-828 million yuan, which is higher than the 370 million yuan that announced in Hangzhou second Qiandao Lake water transfer project environmental impact report in 2014. Since this report considered the economic cost, and analyzes the environmental cost such as the deterioration of water quality, regional climate change, the change of species from the perspective of technology and engineering, not including economic analysis of the influence to the social life, most of which failed to be monetization analyzed. Contrastively, this paper consider those and result in the estimated cost is more than 370 million yuan, the results in the report. It can be seen that there is large cost of Qiandao Lake water transfer project which cannot be overlooked. Based on the main conclusions and results, some measures should be taken during and after the project to protect the water environment and residents' lives along the drainage basin of XiAn River. One the one hand, a mechanism for ecological compensation, tightened supervision and administration are very necessary. One the other hand, receiving-region, Hangzhou city should reinforce the water management and wastewater treatment, saving water, to seek settlements in the context of quality-induced water shortage together.

Key words: Qiandao Lake water transfer project, environmental cost, water diversion area, willingness to pay, contingent valuation method