The situation of China's water resource management has become extremely serious and tends to be worse. The lack of system is one of the reasons that water resource management becomes extremely difficult. As an important part of water resource system, the economic institution of water resources plays a key role and its literature review could highlight the reference meanings for further studies. The theory of water resource economic system is based on the external theory and public goods theory. Public goods theory is an extreme case of external theory. The fiscal/tax arrangement and the property right arrangement of water resources are considered as two directions to solve the problems caused by externality and public goods attribute. Pricing strategy is a specific means. The economic institution of water resources includes fiscal/tax arrangement, property right arrangement, and pricing strategy. The fiscal and tax institution of water resources in accordance with the Pigou theory mainly consists of payment for water resources and eco-compensation arrangement. The property right institution of water resources in accordance with Coase theory contains water right arrangement and water pollution right arrangement. Payment for water resources is to solve the problem that the value of water resources has been underestimated for a long time. Eco-compensation arrangement of water resources is to solve problems in water resource utilization, emission and other aspects of the externalities. Water right arrangement and water pollution right arrangement are designed to solve the problems of ownership of water resources (including the right of ownership, use right, pollution right and emission right). Meanwhile, pricing strategy is a market-oriented means to solve the problems mentioned above. The price institution of water resources is the fusion and extension of both the fiscal/tax institution and the property right institution. This paper is made up of three parts which can be described as a ″1+4+1″ framework. The first ″1″ is the theoretical basis and framework of water resources economic institution, ″4″ means the special institution including payment for water resources, eco-compensation arrangement, payment for water resources and eco-compensation arrangement. The second ″1″is a comprehensive review of water resources economic institution. This paper focuses on the core issues of water resources economic institution and discusses some practical problems in the field of water resources management in China. Finally, the result of this paper shows that there is inadequate attention on researches on single institutions, theoretical researches and management systems. Meanwhile, combinations and optimizations of institutions, case studies of institutional practices and public water governance are finally pointed out and suggested as further research topics.