Abstract: To promote cooperation among regional stakeholders, thereby further improving the regional water resources allocation model based on network flow theory, economic mechanism design and mathematical related theories were used to construct an incentive compatibility mathematical model.This model has been applied to the Xinsheng area in the Cao′e River Basin and the relevant parameters have been calibrated.The simulation calculation results of regional relevant data in 2003 and 2022 showed that each stakeholder can realize cooperative games under the action of the incentive compatibility mechanism, thereby improving water resource allocation efficiency.The study concluded that the Network Flow model was an effective means to achieve optimal allocation of regional water resources.The incentive compatibility mechanism can further promote the Network Flow model to improve allocation efficiency.The differences in resource endowments and China′s institutional advantages are the intrinsic needs and external constraints for the realization of cooperative games.