This paper describes an integrated approach developed to model the physical and related social welfare impacts of alternative water allocations in the Dak Lak plateau, Viet Nam. A physically based, distributed and integrated model of the plateau’s surface and groundwater resources has been developed. This model distributively links hydrodynamics and water use decisions, in particular how the plateau’s hydrology responds to different spatial configurations of cropping patterns, crop water allocations and urban water use. The outputs of this model will be compartmentally linked to economic modelling work in order to simulate distributive welfare outcomes resulting from different water allocation decisions over the short to medium term. The welfare impacts of alternative water allocations are being assessed for three “goods” – agricultural production, urban and environmental – using both revealed and stated preference approaches. This paper is a progress report on this modelling effort, detailing the objectives, approach and integration methodology and including discussion of some results to date.