China used 27 billion yuan (4.29 billion U.S. dollars) from land sales to build farmland water conservation projects in 2011, the Ministry of Water Resources said Saturday.

Local authorities must set aside 10 percent of their revenues accrued from land sales for farmland water conservation projects, according to the central government's No. 1 document issued at the beginning of last year.

"As an increasing number of local governments are implementing the policy, we expect more funds from land sales to be invested in water conservation projects," said Gao Jun, an official with the ministry.

Official data showed that China invested a record 345.2 billion yuan in water conservation construction last year, of which, 231.1 billion yuan came from local governments.

The nation aims to invest 1.8 trillion yuan in water conservation projects during the 12th Five-Year Plan (2011-2015), with the central government contributing 800 billion yuan and local governments raising one trillion yuan.

Gao urged local governments to diversify fundraising channels and encourage private capital to invest in water conservation projects to support the country's water conservation boom.