Abstract: The Dianchi Lake Basin faces persistent pollutant accumulation and slow ecological recovery. As a form of lakeside green infrastructure that connects small towns, villages, and ecological spaces, the Dianchi Lake ring greenway has multiple effects on pollution mitigation, ecological buffering, tourism development, and community revitalization. Based on system dynamics, this study develops an environmental effect model of the ring greenway and simulates changes in pollution control, ecological restoration, and socioeconomic indicators in the Dianchi Lake Basin from 2012 to 2035 under five scenarios: status quo, social priority, economic priority, environmental priority, and coordinated governance. The results show that the environmental priority and coordinated governance scenarios perform better in controlling pollutant inflow and improving ecological indicators, while the coordinated governance scenario shows a relative advantage in balancing ecological restoration, tourism development, and resident satisfaction. The ring greenway affects the environmental governance of the basin through the pathway of 'vegetation restoration-ecological interception-pollution input reduction', and further supports livelihood improvement in adjacent towns and villages through tourism revenue retention, maintenance-related employment, and community participation. The findings provide a reference for small towns in plateau lake basins to coordinate ecological protection, tourism development, and community revitalization.