A digital computer procedure to determine aquifer parameters is developed. The values of permeability and storage coefficient at specific points were of interest rather than functions which describe the spacial distribution of these parameters. The procedure adjusts initial estimates of permeability and storage coefficient to reduce the differences between the measured and simulated water levels. The parameter adjustment procedure uses a steepest descent optimization procedure to minimize the errors in simulating water levels. The partial derivatives necessary for the steepest descent procedure are determined by differentiating the finite difference equation with respect to the acquifer parameters. The net amount of water removed from each node was included as a parameter. The adjustment procedure is iterative in that for each year the model simulates water levels, calculates simulation errors, and adjusts parameters. This procedure is repeated twice using the adjusted values of the parameters. Each year's adjustment of parameters results in a different set of parameter values. These values were averaged and the program was executed using these average values. This resulted in less simulation error than was present when the original values of the parameters were used. (Author)