Regional development and industrialization are investigated, via regression analysis, in relation to the pattern of water resource investments for the island of Puerto Rico. Initial results indicate such investments have little immediate or short-term impact on development patterns •. However, other results suggest over longer periods, significant variations in the regional responses to these investments. By applying a variation of seemingly unrelated regressions of Zellner, subsets of parameter coefficients were restricted across regions. •The unrestricted coefficients were interpreted as explaining .systematic variation in responses to public investments within given regions. Indeed these regional differences are frequently neglected .when simply examining the overall development process. Furthermore, there appears to be a significant relationship, over.the period considered, between·changes in the distribution of income over the island and within given regions and the pattern of water resource development.