In recent years, as a way to address the severe electric power shortage, small hydropower (SHP) has been instrumental in rural electrification. Chinese investment in SHP has been booming consequently, the effectiveness analysis of investment on SHP project has become extremely crucial .This paper established a simplified model basing on NPV and FIRR to evaluate the investment both in financial and national economic perspective. This paper then extended the analysis on the uncertainty during investing SHP projects and presented a risk analysis model. Moreover, this paper not only evaluated effectiveness of SHP projects from the economic perspective, but also analyzed it from social and ecological perspective. In the end of the paper, an empirical analysis on a real project is presented to verify the framework. With the comprehensive analysis on financial, social ,national economical, and uncertainty, this paper are therefore able to build up a framework to evaluate the investment of SHP in China .