© 2013 John Wiley & Sons, Ltd. Today's water systems require integrated water resource management to improve the water supply for conflicting water uses. This research explores alternative policies to improve the water supply for two conflicting uses, hydropower and environmental, using the Leishui River basin and Dongjiang reservoir as a case study. First, the natural flow regime prior to reservoir construction (pre-1992) was estimated by performing a statistical analysis of 41years of daily streamflow data (March 1952-February 1993). This natural flow regime was used as a template for proposing environmental flow (e-flow) requirements. The post-reservoir flow regime (post-1992) (March 1993-February 2011) was analysed to estimate the streamflow alteration. Results show that the natural flow regime has been completely transformed; post-1992 winter normal flows are greater, and summer flows are smaller than pre-1992 conditions. Also, the occurrence of natural floods has been prevented. Second, a planning model was built of the current operation of the Dongjiang reservoir and used for comparison of four alternative water management policies that considered e-flow releases from the Dongjiang reservoir. The scenarios that considered combinations of the current operational policy and e-flow releases performed better in terms of hydropower generation than the current operation. Different volumes of e-flow requirements were tested, and an annual e-flow volume of 75% of the pre-1992 hydrograph was determined to generate the most hydropower while providing for environmental water needs. Trade-offs are essential to balance these two water management objectives, and compromises have to be made for both water uses to obtain benefits.