An explanatory economic model is proposed for the determination of water reuse rates based on the classical theory of the firm as a cost-minimizing institution. The firm's water behavior is conceptualized as consisting of a finite set of interdependent relationships with each relationship representing some specific segment of the entire operation. The individual relations were construed as jointly or simultaneously providing a theoretical representation of the entire ongoing manufacturing operation. Employing the simultaneous equations technique a set of four relations purporting to represent the water operations of the manufacturing firm was hypothesized.