We appreciate the thoughtful review of our paper [Dawdy and Gupta, 1995] by Ouarda et al. [this issue]. In speaking to some of their points we may be able to clarify some of the points we tried to raise, though perhaps not sufficiently. Before discussing specific issues raised by Ouarda et al. [this issue], we first wish to state unequivocally that our research addresses the long-standing problem of developing a physical basis of regional flood frequencies and hydrologic extremes. Even though the importance of this problem is widely recognized in the literature, not much progress has been made on this topic in river basin hydrology and hydroclimatology. Recent advances in the analysis of spatial rainfall data, regional flood data, and topographic data of large river basins are beginning to change this situation radically because they suggest a totally new and previously unexpected research direction in developing a physical statistical theory of regional floods. The main theme underlying this research program, as outlined by Gupta and Waymire [1996], is to exploit the hypothesis of statistical self-similarity, or scaling invariance, in the spatial variability of rainfall, channel network structures, and floods, since the presence of scaling invariance in each of these has been supported by recent data analyses. Since we are in the early stages of development of this new theory, we think that it is necessary and very useful to examine various implications of scaling in-variance against data analyses, as done by Smith [1992], Gupta and Dawdy [1995], and Dawdy and Gupta [1995], and other models, such as the derived distribution approach (J. S. Rob-inson and M. Sivapalan, An investigation into the physical causes of scaling and heterogeneity in regional flood frequency , submitted to Water Resources Research, 1996) and the index flood assumption [Gupta et al., 1994]. This introduction furnishes the broad context within which our response should be interpreted and understood. Regarding our statement "the significance of [the Matalas et aI. [1975] paper] appears to have been lost in the literature" (p. 2762), we thank Ouarda et al. [this issue] for clarifying our statement and giving some historical perspective. It appears from their references and discussion that situation is worse than we thought. This confusion of sorts is best reflected in the use of "the skewness separation as a criterion for discrimination between candidate [probability] distributions" [Ouarda et al., this issue], which is manifested by thinkSng about the problem of regional flood frequency purely formally and statistically and not physically. This has been a generic problem with the development of most of statistical hydrology during the last quarter century. The "significance" of which we speak of is in terms of a physically based understanding of regional flood Copyright 1997 by the American Geophysical Union. Paper number 96WR02732. 0043-1397/97/96WR.02732509.00 frequency relations. The paper by Ashkar et al. [1992] is a case in point and is...