Due to intensive human activities, water environment systems in China have severely deteriorated, particularly in villages and towns. How agricultural and complex point sources contribute to this deterioration remains unknown. We developed a system dynamics prediction and regulation model to assess the water environment carrying capacity (WECC) of the Tongyang River Basin. Four development scenarios were proposed for the analyses: status quo, socioeconomic restrictions, sustainable use of water resources, and sustainable development of the water environment. In the status quo simulation, the overall water demand surpasses the capacity threshold after 2027, and the water resource deficit approaches 60 million m³ by 2035. Moreover, pollution parameters like chemical oxygen demand, ammonia nitrogen, total phosphorus, and total nitrogen (TN) show a significant rise after 2030. TN is the primary factor limiting water carrying capacity in the Tongyang River Basin. Under different scenarios, the concentrations of pollutants decrease, and then increase. Under comprehensive management, the WECC index values are predicted to be 31% lower in 2035 than those of 2020, indicating that there is room to improve the most crucial WECC index. Our findings can provide theoretical basis for rural development and water environment protection in Tongyang River Basin.