Water supply is a hydrologic phenomenon, whereas water demand is largely driven by human wants and needs. The combination of these two systems, hydrology and economics, is necessary for accurate modeling of our water resources. Moreover, in times of drought or water scarcity it is the human behavioral component that will determine whether a regionís water supply can be sustained. The stakeholders of the San Juan Basin are many and varied, from Indian tribes, agriculture interests, and municipalities, to recreational fisherman, power generators and conservationists. Stakeholders must make policy decisions regarding shortage sharing in times of drought to ensure their water supplies are sustainable. We develop a system dynamics simulation model for the San Juan Basin watershed (located in the states of New Mexico and Colorado). The model can be used to quantify shortage-sharing amounts needed for sustainability of water supplies. Hydrology drives the water supply while economics drives the water demand.