In this paper, a System Dynamics(SD) computer simulation model has been developed to assess the effects of developing and providing an alternate water source. A water service index was also developed to estimate the level of overall customer satisfaction on water supply service. Data from the Busan water supply service and the Korea Development Institute regarding the Nak Dong river bank storage development were utilized during the modeling processes. Some important indicators of the system under study were analyzed by the simulations of development of the alternate water source for Busan. The developed SD model and the water service index can be further utilized as a tool that can assess the extent and timing of an additional service improvement project.