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Understanding the trade‐offs between water for the environment and water for hydropower in regulated rivers can inform decision making about hydropower system planning, policy and operations, especially with anticipated climate warming–induced changes in runoff. This study used a multireservoir optimisation model to assess the hydropower effects of increasing minimum instream flows (MIFs) and imposing weekly scale down ramp rates (DRRs) in three locations in California's Upper Yuba River (UYR). The UYR is currently used for hydropower generation yet has high potential for freshwater habitat restoration. Trade‐offs between DRRs, MIFs and hydropower generation and revenue are explored with uniform air temperature increases of 0 °C, 2 °C, 4 °C and 6 °C to approximate anticipated regional climate warming. With 6 °C warming, the most ecologically beneficial MIF and DRR reduced hydropower generation by 7.9% and revenue by 5.5% compared with base case management and a historical climate. This has important implications for licensure of the UYR project and other hydropower projects, where multiple benefits under current and potential future conditions must be balanced. This study provides a methodological approach that can be used by water managers, regulators and stakeholders to better understand inherent trade‐offs in allocating water for multiple beneficial uses in a nonstationary hydroclimate. Copyright © 2012 John Wiley & Sons, Ltd.

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