Because of Taiwan's small area, dense population and steep terrain, it has few large lakes to act as natural reservoirs. Thus, water for public consumption, irrigation, and industry depends on artificial reservoirs. This makes water and soil conservation in the high mountain watershed areas particularly important. Shei-Pa cares for a large mountain area right in the middle of the northern half of Taiwan, and water from the park goes to supply northern, northeastern and central Taiwan. Watersheds divide the streams and rivers in the park into four systems:

• The northeast corner is drained by the Takejin Creek, flowing down from the Dabajian Mountain region to join the Danshuei River, which supplies water for Taipei City.
• The streams on the southeast slopes of the Syue Mountain Range join the great the Dajia River, which is more than 120 km long, feeds the Deji Reservoir and supplies water for Taichung City.
• The western half of the park is the watershed area of the Da-an River, which provides water for Miaoli County and Taichung City. The larger upper branches of the Da-an River include the Syueshan Creek coming down from the Syue Mountain Range, and, to the north, the Madara Creek. Madara is the aboriginal name and means "brown unclear water," a reference to the red-brown color of the river bed.
• In the northwest corner of the park, the slopes north of Le and Kuai Mountains drain into the Toucian River, which supplies water to Hsinchu City.

The water's gurgle is the voice of my father's father.
The rivers are our brothers;
they quench our thirst.
The rivers, between the tender arms of their banks, carry our canoes where they will.

~~ Chief Seattle

The conservation work of the park includes the task of maintaining the quality of the water leaving its boundaries. Agricultural activity in the park can involve over-exploitation of mountain slope land and excessive land clearance, leading to soil erosion and overuse of agrichemicals, causing pollution of the streams. The park authorities endeavor to keep a balance between agricultural development and the maintenance of water quality.

There are not many high mountain lakes in Taiwan, but there are four or five in the park, including Cuei Pond near Syue Mountain, which, at the altitude of 3,530 meters, is the highest lake in Taiwan.