The study contains three parts. In Part I, the literature of water allocation is reviewed and the permit system of administrative allocation is analyzed in terms of rational guidelines for allocating water as a scarce resource among competing alternatives. In an effort to generate information about water productivities, to the end that additional points on the production function might be identified administratively as permits are granted under conditions of limited water supply in a particular area, a general model is constructed in Part II using a linear programming approach to resource allocation within an identified hydrologic area. In Part III, the general model was extended and refined to include detailed water quality considerations using both linear programming and simulation. The resulting Tandem Program Systems (TPS) Model makes possible cost adjustments in producing activities based upon the character of the wastes produced thereby, the assimilative nature of the stream and the treatment costs for maintaining a pre-determined level of water quality in the stream. (Author)