Draining B into C is consuming energy from the environment. You most certainly can drain some of the water from B to C so as to move other water from B to A. B

Draining B into C is consuming energy from the environment. You most certainly can drain some of the water from B to C so as to move other water from B to A. But you will always do so at a net loss. The unit of water moved from B=60 to A=61 gains A-B=1 unit of potential energy, in addition to the B-C=40 units of potential energy it already had for a total of A-C=41 units. However, without a 100% efficient (read impossible) pump and turbine combo, it takes more than 1 unit of energy to raise up that unit of mass. This means you need to spill more than 1/40 units of water from B to C to get that 1 unit from B to A. Now dropping that water from A to C would get you 41 units of energy, 1 more than if you had spilled it straight from B to C, but it cost you more than 1 unit of energy to get into this situation. A is indeed a higher quality source than B, but you are using that low quality source of B to generate your energy, and the efficiency losses there will always be greater than the gains you make on the higher one. To break even the initial height/temperature differential would have to be infinitely high. Now if for some reason you could not harvest energy directly from B-C, yes you could use water going from A to C to power the pump from B to A, it would just be less efficient. This would be the equivalent of a siphon.