The present subject matter is directed to a method for operating a wind turbine. The method includes calculating one or more blade root loads, e.g. a blade root resultant moment, of at least one rotor blade of the wind turbine. Another step includes estimating a span-wise loading of the rotor blade based at least partially on the one or more blade root loads. The method also includes determining a deformation margin of the rotor blade based at least partially on the span-wise loading and one or more estimated deformations occurring on the rotor blade. Another step includes controlling the wind turbine based on the deformation margin.