Water shortage is a major problem in northern China, because of a huge population and rapid economic growth. Taking the Luanhe River Basin (LRB) as a study area, we set up a System Dynamics (SD) model of the basin for the period 2005–2010, and considered various important socioeconomic and environmental factors and their correlation. Significant trends for the period 2011–2030 were simulated and the water resource carrying capacity (WRCC) of the LRB and its trends over the next 30 years were analyzed. The results indicate a decreasing trend of WRCC in the basin and that current economic growth is not sustainable. The study investigated possible optimized allocation projects. The most apt project would involve a combination of strategies that could considerably increase the WRCC, reduce demand, and improve water quality.

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