<p>The uneven distribution and scarcity of water resources in Henan had affected socio-economic development, and the scientific allocation of limited industrial water resources was essential to alleviate these constraints. Previous studies had addressed either efficiency appraisal or allocation separately, with few attempts to integrate them through multi-objective optimization allocation, particularly at the prefecture level in water-scarce regions. Thus, the global super-efficient slack-based measure data envelopment analysis model and the Global Malmquist-Luenberger productivity index were employed to evaluate industrial water efficiency in the cities of Henan from 2010 to 2020. Additionally, the Grey forecasting model was applied to predict industrial water demand, and the third-generation non-dominated sorting genetic algorithm was employed to optimize the allocation of industrial water across cities for 2025 and 2030. Results indicated that larger industrial water shortage volumes coincided with higher industrial water use efficiency in Henan Province. Water resources utilization efficiency and technological progress did not keep pace with industrial production needs and water demand, leading to lower allocations in scenarios optimized for maximum economic and environmental benefits. Allocating strictly according to demand risked inefficient use and potential waste of scarce water resources. The study proposed policy recommendations.</p> Graphical abstract <p></p>