Drought is one of the major natural disasters affecting the development of economies and society. Drought early warning is the primary step and most important non-engineering measure for drought relief. This paper took Yuqiao Reservoir in Tianjin as a case study and analysed inter-annual changes of the drought limit water level. First, the causality between variables in the water supply–demand system was analysed, and a structural diagram of water sources allocation was drawn. Coupled with the parameters and a structural diagram, a system dynamics (SD) model of the water supply volume was established. Secondly, simulation results were tested to ensure that the model was valid. The water supply volume from 2003 to 2020 was simulated by using the model. Finally, based on the inflow process and the water supply volume, the drought limit water level was calculated. The results showed the water supply volume of Yuqiao Reservoir has changed remarkably. The drought limit water levels in 2003–2012 and in 2016–2020 were 16.70 m and 16.30 m, respectively: a difference of 0.40 m. The regulation curve of guarantee for water supply during 2016–2020 is significantly lower than that of 2003–2012. This research is of great significance for drought resistance, disaster mitigation and reservoir management.

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