The article analyses a transdisciplinary wicked upstream–downstream conflict over water allocation in an arid region of Inner Mongolia. This conflict is about scarce water resources which can be either allocated to irrigation agriculture upstream or to preservation and restoration a rare ecosystem downstream. This conflict is located at the interface of environmental and agricultural ethics. The case study is about Heihe River, agricultural demands for irrigation in the region of Zhangye, and endangered Tugai forest at downstream Heihe in Ejina oasis. (...) Authors use a theoretical approach of environmental philosophy and rely on the concept of ‘strong sustainability’. From this background two normative yardsticks are derived: a constant natural capital rule and the overall satisfactory goodness of a river basin. Both yardsticks are not met at Heihe. Downstream, we see the endangered Tugai forest as a location which should be preserved de re. We argue for a viable institutional water saving strategy within the agricultural areas of Zhangye district by which Tugai forests at downstream Heihe might be restored. Our case study indicates that even wicked problems can find proper and prudent solutions. (shrink)