China will encourage more social capital to take part in the construction of water conservancy projects, a senior official said on Tuesday, as the country is set to begin the construction of 27 water projects this year.

Jiao Yong, vice-minister of water resources, said more social investment would be encouraged to take part in the construction of water conservancy projects, as social capital currently only took up less than 20 percent of the total investment in water conservation projects.

"We cannot rely solely on State finance for the funding of water conservancy projects. However, we also need to make sure that social capital will get appropriate returns from the investments," he said at a news conference on Tuesday.

A State Council executive meeting presided by Premier Li Keqiang in May 2014 decided that the country will build 172 water conservancy projects by 2020.

Of the 172 projects, 57 projects were under construction in 2014. Jiao said the rate of return for the social capital must be at least above the return rate offered by the national debt to attract social funding.

Meanwhile, the country could raise water prices in an area that has benefited from a water project to ensure the return rates of social capital.

"The setting of water prices must take into account the cost of construction, scarcity of resources and the environmental costs. If water prices can be raised, there will be more attraction to the social capital," Jiao said.