Rapid economic growth, along with a large population, the development of irrigated agriculture, and environmental degradation, placed great stress on the limited water resources of the People's Republic of China. As of 1997, however, no sector-wide assessment had been made of critical short-term issues nor of long-term issues that should be addressed if the People's Republic of China's ability to manage its water resources in a sustainable manner were to be strengthened. This research proposal looked to assist the Government to define strategic options for management of the water sector to lead to sound investment decisions in the sector.