The primary purpose of the dam is to provide water for the cities of Tianjin and Tangshan, located to the south.

Water supplied by the dam is used for industrial, agricultural and municipal needs in Tianjin and Tangshan.

[3][4] The scenery around the reservoir is a popular tourist destination and with the surrounding terrain, it is often called "Qianxi Little Three Gorges".

The dam sits at the head of a 33,700 km2 (13,012 sq mi) catchment area which constitutes 75 percent of the Luan River basin.

A small power plant on the lower reservoir dam contains two 5 MW Kaplan turbine bulb-generators.