Drought is a complex natural hazard that may have destructive damages on societal properties and even lives. Generally, socioeconomic drought occurs when water resources systems cannot meet water demand, mainly due to a weather-related shortfall in water supply. This study aims to propose a new method, a heuristic method, and a new index, the socioeconomic drought index (SEDI), for identifying and evaluating socioeconomic drought events on different severity levels (i.e., slight, moderate, severe, and extreme) in the context of climate change. First, the minimum in-stream water requirement (MWR) is determined through synthetically evaluating the requirements of water quality, ecology, navigation, and water supply. Second, according to the monthly water deficit calculated as the monthly streamflow data minus the MWR, the drought month can be identified. Third, according to the cumulative water deficit calculated from the monthly water deficit, drought duration (i.e., the number of continuous drought months) and water shortage (i.e., the largest cumulative water deficit during the drought period) can be detected. Fourth, the SEDI value of each socioeconomic drought event can be calculated through integrating the impacts of water shortage and drought duration. To evaluate the applicability of the new method and new index, this study examines the drought events in the East River basin in South China, and the impact of a multi-year reservoir (i.e., the Xinfengjiang Reservoir) in this basin on drought analysis is also investigated. The historical and future streamflow of this basin is simulated using a hydrologic model, Variable Infiltration Capacity (VIC) model. For historical and future drought analysis, the proposed new method and index are feasible to identify socioeconomic drought events. The results show that a number of socioeconomic drought events (including some extreme ones) may occur in future, and the appropriate reservoir operation can significantly ease such situation.