Based on the Theory of Complex Adaptive System developed recently, a holistic model for water resources system is established at the basin level for analyzing water resources management and allocation of the basin. In this holistic model framework, the subsystems of the water resources system, including hydrologic components, agricultural and industrial production, human living, ecosystem and enviorenment are combined in a dynamic connection with inner variables. According to the characteristics of the holistic model framework, a nesting genetic arithmetic is employed to solve the nonlinear optimal model. The model is applied in the Yellow River basin to analyze the rational amount of diversion water for the West Line of Water Transfer Project form South China to North China and its marginal benifit. Based on the Theory of Complex Adaptive System developed recently, a holistic model for water resources system is established at the basin level for analyzing water resources management and allocation of the basin. In this holistic model framework, the subsystems of the water resources system, including hydrologic components, agricultural and industrial production, human living, ecosystem and enviorenment are combined in a dynamic connection with inner variables. a nesting genetic arithmetic is employed to solve the nonlinear optimal model. The model is applied in the Yellow River basin to analyze the rational amount of diversion water for the West Line of Water Transfer Project form South China to North China and its marginal benifit.