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We present a system-dynamics model to simulate the interplay between water management, hydrological extremes (droughts and floods), and society. We illustrate the potential and limitations of the model with an example application to the Brisbane river basin (Australia). In particular, we test its capability to explain various phenomena that have been empirically observed, including the levee paradox, (mal)adaptation, and supply-demand cycles. To illustrate, we consider four water-management strategies: no actions, in which no measures are adopted to mitigate droughts and floods; fighting floods, in which a levee system is built and raised to cope with flooding; water conservation, in which demand management is implemented to cope with drought; and water exploitation, in which the water supply is increased to cope with drought. Our findings show that changes in flood and drought awareness can help contribute to the emergence of multiple phenomena. Moreover, the outcomes from the proposed coupled-modeling framework indicate that water-management strategies aimed at specific hydrological extremes can in turn shape the severity of opposite natural hazards. Given its explanatory value, the model can contribute to a better interpretation of changes in drought and flood risk and the role of alternative water-management strategies. [ABSTRACT FROM AUTHOR]