This paper describes the philosophy, algorithms, and implementation of a computer‐oriented land use forecasting‐water policy simulation model. The model is applicable to SMSA's organized on a census tract basis by counties. The forecasts are macro to the census tract level for industrial, residential, commercial and public land uses, and are dynamically altered by hypothesized water management policies. Modeling is based on an economic data base of the region, and is extremely flexible for the user. An example set of simulations is included for illustrative purposes.