Due to the limited water resources and the increasing water needs, the use of new water resource allocation has become more important. Studies on the construction of a dam on the Azaroud River in western Mazandaran were conducted to providing the needs of drinking and agriculture water. The aim of the present study is to manage the allocation of water resources of Azaroud River to providing the demand in the drinking and agricultural sectors. For this purpose, the Azaroud Dam and downstream areas were simulated with the MODSIM model, and then the model was run for current conditions and two different scenarios of future development plans. The proposed scenarios include the first scenario (construction of the dam and regulation of drinking, agricultural, and environmental water in all months of the year), the second scenario (existing conditions), and the third scenario (construction of a dam and regulation of drinking and agricultural water in all months of the year and environmental needs only in non-agricultural seasons). The parameters used in this model include the base flow of Azaroud River and rainfall as inputs, drinking, agricultural, and environmental water uses as outputs, and overflow and evaporation from reservoir surface as reservoir losses. The obtained results showed that in second scenario, the main shortage is related to the summer season, so in the long period, due to the coincidence of peak drinking water consumption with agriculture, the problem of drinking water supply will remain. In the third scenario, part of the river downstream dries up in the summer; Therefore, the most suitable option is the first scenario, which will provide at least 15 million cubic meters of drinking water by building the dam. The average annual shortage for drinking, agriculture and environment needs in this scenario will be 0.8, 7, and 0.31 percent, respectively.