The network model of a water resources system consists of nodes and directed arcs. The nodes represent supplies where water is originated, uses where water is consumed, and intermediate nodes where water is conserved. Linear unit 'costs' (representing actual costs or some function of returns) are imposed on appropriate network arcs. An other constraints on the amount of water to be allocated from a particular supply to a particular use are also imposed as bounds on appropriate network arcs. A network model and the out-of-kilter Algorithm were used to determine optimal plans to meet the water supply requirements in the Kaskaskia River Basin in South-Central Illinois, over a planning period of 50 years starting in 1970, using local surface and ground water sources and a source of water import.