A conflict over water use and oil sands development in the Athabasca River Basin is modelled, and a stability analysis is carried out based on the Graph Model for Conflict Analysis. Oil sands require a great deal of water to extract bitumen, which may lead to insufficient water supply to the downstream area. Moreover, inappropriate waste water disposal can have serious effects on local fresh water resources. In order to balance industrial development and environmental protection, the conflict among the Alberta government, oil sands companies, and non-governmental organizations are analyzed, and insights and reasonable suggestions are provided.