Initial allocation of stream water discharge right is a key factor in water right exchange mechanism, and a basis in promoting a fair water discharge and sustainable development. This paper, based on the research advances on rare resources allocation, presents an initial allocation model of water discharge right based on chaos optimization-projection pursuit by means of initial allocation methods of water right and waste water discharge right. Projection pursuit can avoid subjective evaluation, sample-driven optimization is more objective. Initial allocation proportion of water discharge right is finally determined through chaos optimization which is used to calculate the premium projection. Case study on Jiangsu section of Huaihe stream validates this method feasible, which covers historical loss, economic development and ecological environment that plays a leading role. The initial allocation proportion of central Jiangsu in Huaihe stream is generally higher than northern Jiangsu.