A water resource optimization model is described for use in long-range infrastructure planning for water supply and waste water management. The model includes a network analyzer to determine least-cost allocation of available sources of water supply (including reclaimed waste water) to various demand points subject to certain physical constraints and water management policies, a recosting procedure for nonlinear cost functions, a digital groundwater model for simulating widespread changes in groundwater depth, and a salt balance model for simulating groundwater quality changes with time. The modeling system provides costs for the optimal water resource allocation for various sets of constraints as well as the environmental changes in the groundwater reservoir, as represented by the number of years until groundwater levels fall to 76 m below 1970 levels and quality of the supply. The most cost-effective alternative was identified and used to develop a 50-yr water supply and waste water management plan for the Tucson, Arizona, regional area.