There can be a particularly fragile balance between water supply and demand in small island communities (such as Mallorca) which have developed a reliance on tourism. Over‐abstraction has caused an increase in salinity of groundwater resources and has exacerbated a general shortage of fresh water. The island also has important ecological reserves, but such habitats and species are threatened by the development of tourism and intensive agriculture. The paper describes the environmental strategies for water, ecology, agriculture and landscape devised for a proposed new town. These strategies were the basis for integration of other elements, including renewable energy, waste and transport – all designed with sustainable principles. The strategies were incorporated into the winning masterplan for an international competition which was organized by the Govern Balear.