The excessive growth of water hyacinth is a common environmental problem in tropical regions.  The use of water hyacinth to remove nutrients from bodies of water and to produce biogas is a technically  feasible way of controlling water hyacinth, but its environmental and economic performance are not well  understood. This study collected data from an experimental biogas plant to develop a lifecycle analysis and  a cost benefit analysis for the control of water hyacinth in Dianchi Lake, a eutrophic lake in China. A  comparison was made between the proposed project and the current approach at Dianchi Lake of disposing  of water hyacinth via collection and landfill. The results revealed that the proposed project is economically  feasible with a desirable energy gain. The results also showed that the project is not financially feasible but,  compared to the current landfill practice, the government would be able to spend less on controlling water  hyacinth if they implemented the proposed project. The removal of water hyacinth to produce biogas can  also contribute to water quality improvement and GHG emission reduction; however, these values depend  on the scale of processing undertaken by the biogas plant. Since both the current approach and the  proposed project can remove nutrients from bodies of water, the additional value resulting from the  proposed project of an improvement in water quality only becomes possible when the processing scale of  the biogas plant is greater than the amount of water hyacinth disposed of by landfill. The proposed project  can avoid methane emissions when the processing scale is greater than the amount of water hyacinth  currently disposed of via landfill. The internalization of GHG emission reduction alone is not sufficient to  make the project financially feasible and therefore other sources of compensation are needed in order to  promote the production of biogas from water hyacinth. The proposed project could be a potential  microeconomic option, which could respond to China’s macro water pollution control policies, renewable  energy development, and energy saving and emissions reduction. However, institutional arrangements are required to coordinate these diverse policies when they are applied to the proposed project.