Water resources engineering is facing with the complex problem when the construction of hydro power plants and its techno economic evaluations is charged with environmental and social problems. This paper is dealing with the selection of optimal small hydro power plants construction in the catchment area of Babinopoljska river, in Prokletije region in Montenegro. Total available potential, technically available and technically usable potential on the fifteen small hydro power plants profile and for catchments area in total was calculated, as well as average and installed discharge, net head, installed power and energy production for each constructed power plant. Cost benefit analyses for fifteen possible small hydro power plants is conducted, together with belonging environmental and social parameters. Delphi method was applied for the results quantification of Environmental and Social impact assessment study of the project. Optimal energy efficient construction solution was developed by mathematical multi criteria operational research method. Numerical introduction of environmental and social parameters in to techno economic analyses is novelty of this research. The result is the solution of three small hydro power plants, which belong to the concept of sustainable development of the region
