Keywords:Water management Sustainable irrigation Hydro-economic modeling Policy analysis Semi-arid regions Sustaining irrigated agriculture to meet food production needs while maintaining aquatic ecosystems is at the heart of many policy debates in various parts of the world, especially in arid and semi-arid áreas. Researchers and practitioners are increasingly calling for integrated approaches, and policy-makers are progressively supporting the inclusión of ecological and social aspects in water management programs. This paper contributes to this policy debate by providing an integrated economic-hydrologic modeling framework that captures the socio-economic and environmental effects of various policy initiatives and climate variability. This modeling integration includes a risk-based economic optimization model and a hydrologic water management simulation model that have been specified for the Middle Guadiana basin, a vulnerable drought-prone agro-ecological área with highly regulated river systems in southwest Spain. Namely, two key water policy interventions were investigated: the implementation of mínimum environmental ñows (supported by the European Water Framework Directive, EU WFD), and a reduction in the legal amount of water delivered for irrigation (planned measure included in the new Guadiana River Basin Management Plan, GRBMP, still under discussion). Results indícate that current patterns of excessive water use for irrigation in the basin may put environmental ñow demands at risk, jeopardizing the WFD's goal of restoring the 'good ecological status' of water bodies by 2015. Conñicts between environmental and agricultural water uses will be stressed during prolonged dry episodes, and particularly in summer low-ñow periods, when there is an important increase of crop irrigation water requirements. Securing mínimum stream ñows would entail a substantial reduction in irrigation water use for rice cultivation, which might affect the profitability and economic viability of small rice-growing farms located upstream in the river. The new GRBMP could contribute to balance competing water demands in the basin and to increase economic water productivity, but might not be sufficient to ensure the provisión of environmental ñows as required by the WFD. A thoroughly revisión of the basin's water use concession system for irrigation seems to be needed in order to bring the GRBMP in Une with the WFD objectives. Furthermore, the study illustrates that social, economic, institutional, and technological factors, in addition to bio-physical conditions, are important issues to be considered for designing and developing water management strategies. The research initiative presented in this paper demonstrates that hydro-economic models can explicitly intégrate all these issues, constituting a valuable tool that could assist policy makers for implementing sustainable irrigation policies.