The Pearl River Delta Economic Zone is the most dynamic economic area in South China. One of the major problems in the region is the sustainable utilization of the water resources. On the basis of analysis of the water environment status and pollution sources, it is suggested that domestic sewage is the primary cause of pollution. Two new concepts "degradation coefficient" and "degradation volume" of water resources, due to pollution, which may be used to assess macroscopically the carrying capacity of the water resources and sustainability of the water environment, are proposed by the authors. The results calculated indicate that the volumes of degraded water resources will be up to 204, 352, and 537 million m3 in 2002, 2010, and 2020. It is suggested that water for daily consumption and domestic sewage must be controlled more effectively and there should be cross-regional coordination in tackling problems of water environment.