In this study, we propose a synthesized environmental management policy by computer simulation that includes introduction of biomass energy recycle plant to control air and water pollutant emissions. We consider both the total ecological system in and around the lake and the socio-economic situational changes over a certain period of time in the catchment areas of Lake Kasumigaura. The results establish that effective utilization of biomass resources allows simultaneous pursuit of environmental preservation and economic development. When we utilize biomass resources, cross-sectoral cooperation becomes essential, because this process needs knowledge and skills from various fields, such as excreta disposal, power generation and legal science. However, red tape problems exist in the present circumstances. These problems in our society must be reduced and resolution of global environmental problems encouraged. JEL classification: Q42, Q53, Q58