Clarence Cannon Dam and Mark Twain Lake were built to provide Northeast Missouri with the benefits of hydropower, flood control, recreation, fish and wildlife conservation and water supply. In planning for future growth, 20,000 acre-feet of water storage was allocated for water supply. However, northeast Missouri region did not experience the anticipated population growth and only a third of the allocated water is currently used for water supply. As per the contract signed in 1988, the State of Missouri makes payments on capital costs of construction of the dam/reservoir, interest on capital, operation and maintenance. In addition, if not all of the 20,000 acre-feet of water is not put to use by 2038, the State of Missouri is due to pay $11.3 million to the U.S. Army Corps of Engineers. The purpose of this study is to estimate the future water demand, optimize water use as well as financial resources and make policy recommendations to the decision makers on resource allocation in Missouri. The results indicate savings to Missouri which can be used to address water resource needs in other parts of the State.