The objective of the research is to determine the importance of economic factors on decisions relating to the planning of an urban surface water supply system. Economic factors include: rate of population growth, rate of industrial growth, water use rates, waste water reuse, recreation, costs of construction, operation and maintenance of facilities, interest rate, and costs of using alternative water supplies in the event of local water shortages. A case study involves the urban surface water supply system of the Washington, D.C. metropolitan area. The research centers around the use of a simulation model. Economic response of the system is determined using stochastic hydrology.