Many river basins in the Global South are undergoing rapid development with major implications for the interdependent water‐energy‐food‐environmental (WEFE) “nexus” sectors. A range of views on the extent to which such natural‐human systems should be developed typically exists. The perceived best investments in river basins depend on how one frames the planning problem. Therefore, we propose an approach where the best possible (optimized) implementations of different river basin development scenarios are assessed by comparing their WEFE sector trade‐offs.
We apply the approach to Tanzania’s Rufiji river basin, an area with multiple WEFE interdependencies and high development potential (irrigation and hydropower) and ecosystem services. Performance indicators are identified through stakeholder consultation and describe WEFE sector response under scenarios of river basin development. Results show considerable potential exists for energy and irrigation expansion. Designs that prioritize energy production adversely affect environmental performance; however, part of the negative impacts can be minimized through release rules designed to replicate the natural variability of flow. The reliability of monthly energy generation is more sensitive to environmental‐oriented management than the cumulative annual energy production. Overall results highlight how sectoral trade‐offs change depending on the extent of development, something that may be difficult to regulate in the future, and that there are important basin‐scale interdependencies. Benefits and limitations of the approach and its application are discussed.