The possibility was studied of a gradual extension of the irrigable area of the Tarlac Irrigation System, located in the alluvial plain of Luzon Island (Philippines). The extension would be made by integrating groundwater with surface water supplied from a reservoir already designed. Aquifer exploitation was studied adopting the criterion that groundwater is a very expensive resource to be turned to only in severe drought years. The objectives of the study were twofold: (a) planning the distribution of the wells (to be drilled during the various stages of the irrigation system development) so as to minimize the pumping cost; (b) establishing a policy for the well management in conjunction with the reservoir operation. Different schemes of the combined system management were analysed on the basis of the climatic and hydrological regime over the period 1950–1972. For this period the monthly water requirements for the different crops and the monthly values of aquifer recharge were computed. The economic analyses were performed using present prices of agricultural products and power together with several different hypotheses about future prices. A finite element model of the semiconfined aquifer was postulated and calibrated; the importance of the return flow from irrigation was also tested. Simulations of exploitation schemes provided a detailed forecast of the aquifer response to the irrigation demands.