The growing importance of the environment and its management has simultaneously emphasized the benefits of hydroelectric power and its environmental costs. In a changing policy climate, giving importance to renewable energy development and environmental protection, conflict potential between stakeholders is considerable. Navigation of conflict determines the scheme constructed, making sustainable hydropower a function of human choice. To meet the needs of practitioners, greater understanding of stakeholder conflict is needed. This paper presents an approach to illustrate the challenges that face small-scale hydropower development as perceived by the stakeholders involved, and how they influence decision-making. Using Gordleton Mill, Hampshire (UK), as an illustrative case, soft systems methodology, a systems modeling approach, was adopted. Through individual interviews, a range of problems were identified and conceptually modeled. Stakeholder bias towards favoring economic appraisal over intangible social and environmental aspects was identified; costs appeared more influential than profit. Conceptual evaluation of the requirements to meet a stakeholder-approved solution suggested a complex linear systems approach, considerably different from the real-life situation. The stakeholders introduced bias to problem definition by transferring self-perceived issues onto the project owner. Application of soft systems methodology caused a shift in project goals away from further investigation towards consideration of project suitability. The challenge of sustainable hydropower is global, with a need to balance environmental, economic, and social concerns. It is clear that in this type of conflict, an individual can significantly influence outcomes; highlighting the need for more structured approaches to deal with stakeholder conflicts in sustainable hydropower development.