Nitrogen and phosphorus mainly from non-point source pollution are the major nutrients that cause eutrophication and degrade water quality. The most serious environmental problem of Dian Chi Lake is eutrophication. Continuing deterioration of the water quality of the lake threatens the drinking water of Kun Ming City and greatly affects local economic development and people's lives. Therefore, in this study, we chose Dian Chi Lake as a case study to consider all factors that influence water quality by focusing on non-point source pollution. The interrelationships between environmental and socio-economic indicators and variables were described and integrated into a dynamic linear mathematical model. The computer simulation approach was used to make comprehensive environmental policies and to evaluate the most cost effective measures to effectively improve water quality. The simulations were run with the computer-based programming software called LINGO.