Large storage facilities in hydropower-dominated river basins have traditionally been designed and managed to maximize revenues from energy generation. In an attempt to mitigate the externalities downstream due to a reduction in flow fluctuation, minimum flow requirements have been imposed to reservoir operators. However, it is now recognized that a varying flow regime including flow pulses provides the best conditions for many aquatic ecosystems. This paper presents a methodology to derive a trade-off relationship between hydropower generation and ecological preservation in a system with multiple reservoirs and stochastic inflows. Instead of imposing minimum flow requirements, the method brings more flexibility to the allocation process by building upon environmental valuation studies to derive simple demand curves for environmental goods and services, which are then used in a reservoir optimization model together with the demand for energy. The objective here is not to put precise monetary values on environmental flows but to see the marginal changes in release policies should those values be considered. After selecting appropriate risk indicators for hydropower generation and ecological preservation, the trade-off curve provides a concise way of exploring the extent to which one of the objectives must be sacrificed in order to achieve more of the other. The methodology is illustrated with the Zambezi River basin where large man-made reservoirs have disrupted the hydrological regime.