Korea's water system and its management have the following characteristics: a traditionally village-based system, currently relying on water supply from rivers and supplemented by regional water supply systems. The recent increase in water demand has caused some regions to suffer from water shortages and as industrialisation in Korea continues, the country will become 'water-stressed' in the 21st century. Furthermore, the deterioration of river water quality is aggravating the water-shortage situation, and water is continually being wasted in many ways due to the currently inexpensive water prices. As Korea experiences more water shortages, the need for a more comprehensive and cost-effective management system is becoming ever more apparent. To deal with the present and future needs of the nation's water management, the current long-term plan is insufficient and inefficient. It relies to a great extent on building more dams and treatment plants. However, additional options must be taken into consideration, including the following: the modification of the current regional water supply-based system to a regional wastewater-based system in order to prohibit the direct discharge of wastewater into rivers and to protect their water quality, the implementation of water reuse and other water conservation programmes; the development of alternative water supply sources to reduce the dependency on river sources; the utilisation of water reuse and seawater desalination, and the increase of water price to reduce the water consumption. To understand the workings of these options, they are applied and illustrated in this paper using the example of the Nak-dong river basin. In conclusion, it is emphasised that an environment must be created where water will be thought of as a valuable economic tool, and integrated approaches, looking at all aspects of water systems must be taken, in order to deal with the anticipated water shortage conditions and their related problems.