Water scarcity is a challenge in many arid and semi-arid regions; this may lead to a series of environmental problems and could be stressed even further by the effects from climate change. This study focused on the water resource management in Shanshan County, an inland arid region located in northwestern China with a long history of groundwater overexploitation. A model of the supply and demand system in the study area from 2006 to2030, including effects from global climate change,was developed using a system dynamics(SD)modeling tool. This SD model was used to 1) explore the best water-resource management options by testing system responses under various scenarios and2) identify the principal factors affecting the responses, aiming for a balance of the groundwater system and sustainable socio-economic development.Three causes were identified as primarily responsible for water issues in Shanshan: low water-use efficiency low water reuse, and increase in industrial waterdemand. To address these causes, a combined scenario was designed and simulated, which was able to keep the water deficiency under 5% by 2030. The model provided some insights into the dynamic interrelations that generate system behavior and the key factors in the system that govern water demand and supply. The model as well as the study results may be useful in water resources management in Shanshan and may be applied, with appropriate modifications, to other regions facing similar water management challenges. Water scarcity is a challenge in many arid and semi-arid regions; this may lead to a series of environmental problems and could be stressed even further by the effects from climate change. This study focused on the water resource management in Shanshan County, an inland arid region located in northwestern China with a long history of groundwater overexploitation. A model of the supply and demand system in the study area from 2006 to 2020, including effects from global climate change, was developed using a system dynamics (SD) modeling tool. SD model was used to 1) explore the best water-resource management options by testing system responses under various scenarios and2) identify the principal factors affecting the responses, aiming for a balance of the groundwater system and sustainable socio-economic development.Three causes were identified asried responsible for water issues in Shanshan: low water-use efficiency low water reuse, and increase in industrial waterdemand. To addr ess these causes, a combined scenario was designed and simulated, which was able to keep the water deficiency under 5% by 2030. The model provided some insights into the dynamic interrelations that generate system behavior and the key factors in the system that govern water demand and supply. The model as well as the study results may be useful in water resources management in Shanshan and may be applied, with appropriate modifications, to other regions like similar water management challenges.