This paper analyze the problems of water resource allocation and crop choice in a river basin using spatial analytical tools. Spatial variability of water availability is modelled by the product sum model. Here the water availability at any farm Z(xj) is a joint spatio-temporal environment and socioeconomic process. Water availability is estimated using spatial econometric tool. Here the spatial weight matrix (W) is constructed by taking water user associations (WUA) as boundaries. The choice of a crop is explained using spill over model in which the choice of a crop is influenced by the choice of neighbouring farmers. Here the spatial lag model is modified to adapt the latent variable (y*) which has a binary outcome.