Abstract: A case study was conducted of funds allocation for the coal-denitrification projects of coal burning power plants in Jiangsu Province in a certain year during the "Twelfth Five-Year Plan" period to unfold estimation of environmental effects using the equivalent method, and to compare the allocations of environmental protection funds (EPF) based on environmental effects per unit investment (Method Ⅰ), and combination of investment and effects (Method Ⅱ) with that traditionally based on the amount invested in the project (the present method) for analysis of rationality. Results show that Method Ⅰ, as environment benefit per unit investment is a relative value, would often result in an irrational phenomenon that similar amounts of subsidies are allocated to two projects sharply different in investment size, while Method Ⅱ first sorts the projects into groups in the light of investment size and allocates the funds group by group for the first phase to solve the problem of comparing projects sharply different in investment size, and then among projects in the same group,in the light of their primary fund allocations and direct environmental effects of the projects, separately, which embodies the idea of allocating the environmental protection funds witht both investment size and environmental effects of a project taken into account. The amount of subsidies is closely related to the COD reduction rate per unit of investment of a project. All the findings of the case study demonstrate that Method Ⅱ is very scientific and rational and deserves trial application.