Water resources are an integral part of the socio-economic-environmental system. Water resources have dynamic interactions with related social, economic and environmental elements, as well as regulatory factors that are characterized by non-linear and multi-loop feedbacks. In this paper, a complex System Dynamic (SD) model is used to study the relationship among population growth, economic development, climate change, management strategies and water resources, and identify the best management strategy to adapt with the changing environment in the Tuwei river basin of Northwest China. Three management alternatives viz. business as usual, water supply management and water demand management are studied under different climate change scenarios. Results indicate that water shortage rate in Tuwei river basin may increase up to 80 % by the year 2030 if current management practices are continued or the supply based management strategy is adopted. On the other hand, water demand management can keep the water shortage rate within a tolerable limit and therefore can be considered as the sustainable strategy for water resources management to maintain the economic growth and ecological status of the Tuwei river basin.