[Objective] This study aimed to analyze the factors that affect the investment efficiency of recycled water, and to provide a theoretical basis for the comprehensive evaluating investment efficiency of the reclaimed water projects in small and medium cities in Western China. [Methods] Using the method of system dynamics, the study worked out a computer simulation of 2005-2014 in Weinan City of Shaanxi Province and illustrated the change of investment efficiency of the total output in the reclaimed water project in consideration of the external additional effect. The simulated data included the processing factors of sewage treatment rate, total amount of investment, and the project output, etc. [Results] The sewage treatment rate in Weinan City had increased gradually, but the traditional evaluation method showed a decreasing trend of the investment efficiency. The study indicated that if the external effect was considered, the evaluation of investment efficiency considering was in accordance with the actual trend of increasing. [Conclusion] On the condition of considering the external effect, the evaluation method of the reclaimed water project was comprehensive and can provide decision support for the construction of the reclaimed water project.