In order to make reasonable water price, strengthen the unified basin water resources management, increase the water conservation utilization level and promote sustainable utilization of water resources, the relationship between water environment and economic society is considered. Based on accounting water resources of Taihu basin in 2010, the protection cost evaluation method and the damage of water environment estimating method are adopted to calculate and analyze water environmental degradation cost of Taihu basin in 2010. The results show that: pollution source management is not only out of consideration for environment protection, but also for reducing water environmental degradation cost as much as possible, which is the best choice to avoid economic losses. Water environment degradation analysis provides an important reference for making reasonable water price and water resources unified management.