Water supply systems in watershed cities face challenges due to increasing water demand and arbitrary sewage discharge allocations. Previous studies have primarily focused on water resource allocation and sewage discharge rights, neglecting the intricate interactions between the two. This study introduces a novel approach by integrating sewage discharge rights into the watershed's water resource allocation mechanism. A multi-objective optimization model was developed, employing the Gini coefficient to balance the equitable and economic aspects across various water sectors. This model takes into account the distinct water demands and sewage discharge requirements of different sectors. The findings of this study are as follows: (a) the Gini coefficients for water demand allocation and sewage discharge rights allocation exhibit simultaneous optimization and display consistent trends; (b) when the importance of sewage discharge relative to other water users increases, the return on investment for domestic and industrial water use decreases, but the fairness of water distribution improves; (c) proper allocation of sewage discharge rights can effectively enhance the economic value of agricultural water use. Overall, this strategy has the potential to enhance both the equality and economic benefits of the water supply system while ensuring the sustainable utilization of water and sewage rights in the basin cities.