Economic instruments based on the Beneficiary Pays Principle, with a close linkage with river basin management, have been introduced each in Korea and Japan over the past decade. In Japan, twenty nine examples of Forest and Head Water Conservation Taxes have been introduced since 2003, initiated by the implementation of Omnibus Decentralization Act in 2000. In Korea, the Water Use Charges were introduced for Han River Basin in 1999, after a major industrial chemical spill incident, and for three other big river basins in 2003. These rivers are the sources of water for most of the Korea's major population centers. These economic instruments have been among the main policy measures for water environment preservation in each country since their introduction, and they have some accomplishments and challenges. Although these two systems were introduced based on the same principle that the one who is a beneficiary of certain policy should pay for the policy cost, they have different characteristics in other aspects. Japan's Forest and Head Water Conservation Taxes have some merits. For one, it should be politically rather easy to introduce, because it is taxed widely but very thinly to the all residents concerned. They have some disadvantages; e.g., there is no incentive function to control the use of water by water uers in the tax system. Korea's Water Use Charge System, on the other hand, was able to change its water preservation policy from the management based on jurisdictional units to that based on river basin management units. One of the drawbacks of this system is that it does not give so much incentive for the residents in the upper basin of the rivers to control the discharge of pollutants. The two systems have the same challenge in establishing the basin governance to coordinate and manipulate various interest groups concerned.