Since urbanization poses risks to regional environments, assessing and mitigating these risks is a challenge inherent to the urbanization process. The present study employs an adapted methodology based on the water environmental capacity (WEC) to assess the risks associated with the water environment in an urbanizing area located in a valley of the Chongqing municipality in Southwestern China, with a particular emphasis on its representative regional river. By utilizing hydrological data and planned parameters specific to this region, this study estimates the spatial and temporal distribution of the WEC and pollution loads in the river under various urbanization scenarios. It also explores the potential of the utilization of reclaimed water to mitigate these water environmental risks. The results indicate that the extent of urbanization exerts significant influences on the water environment and, therefore, requires meticulous planning. Areas experiencing higher levels of urbanization in the middle reaches of the river are associated with greater environmental risks compared to those observed in the lower reaches, while minimal risk is observed in the headwater. Due to the pollution loads brought about by precipitation, there is a higher level of environmental risk during the wet season (May–October) compared to the dry season. Utilizing reclaimed water can effectively reduce the pollution loads discharged into the river and is the most efficient means of mitigating environmental risks. To effectively manage environmental risks during urbanization in this valley area, further studies should prioritize examining the correlation between the scale of urban expansion and the river’s environmental carrying capacity. Additionally, it is imperative to establish realistic targets for the river water’s quality and discharge standards for the effluent from wastewater treatment plants. Furthermore, it is crucial to determine an appropriate level of utilization of reclaimed water and delve into the mechanisms behind the method used to assess the water environmental capacity. Despite these challenges, analyzing the spatial and temporal distribution of risk during urbanization and evaluating the mitigative effect of utilizing reclaimed water based on adapted assessments of the water environmental capacity hold reference value for the formulation of environmental management strategies and environmental planning. There is significant potential for this approach to have various applications.