When estimating the benefits from a proposed irrigation project it is desirable to know the best area size to develop for irrigation in conjunction with a given dam. To determine this area realistically both stochastic demand for and stochastic supply of water should be taken into account. In turn, these factors involve the need to know the best area to plant as a function of beginning‐season reservoir levels and the best way to allocate a given quantity of water over an irrigation season. Incorporating the results of models that give solutions to these latter problems into a simulation model and applying it to a hypothetical situation produced estimates of the best acreage to develop for irrigation. The result is sensitive to changes in the fixed costs of the system, and the penalty arising from choosing suboptimal acreages is much greater than the likely costs of applying the model. Although this application of the model has limitations, the basic approach is capable of useful elaboratio