A numerical model was used to simulate the effect of development of the groundwater reservoir in Carson Valley on Carson River outflow, evapotranspiration, and groundwater levels and storage. The basin-fill groundwater reservoir consists of: (1) confined and unconfined sedimentary deposits of Quaternary age that underlie the valley floor, and (2) sedimentary deposits of Tertiary age that are exposed mainly on the east side of the valley. Water levels indicate the presence of two confined aquifer systems: one < 100 ft deep, and the other, generally deeper than 200 ft. The basin-fill reservoir is surrounded by bedrock that transmits recharge to the basin through weathered and fractured zones near the contact between bedrock and valley fill. Estimates were made of the distribution of hydraulic properties of aquifer materials, and of the components of inflow to and outflow from the basin-fill reservoir. Inflow components consisted of the following approximate quantities, in acre-ft/yr: (1) mainstem Carson River flow, 360,000; (2) direct precipitation, 70,000; (3) runoff from perennial and ephemeral streams, 24,000: and (4) subsurface inflow, 38,000. Approximate estimates of outflow components were, in acre-ft/yr; (1) mainstem Carson River flow, 291,000; (2) potential evapotranspiration, 200,000. Both inflow and outflow totaled about 490,000 acre-ft/yr. These flow volumes show that the hydrologic regimen of the basin is dominated by surface water flow of the Carson River. Steady-state and transient calibration of the model provided an unacceptable fit of observed versus simulated groundwater level fluctuations and storage, and surface water outflow from the valley. These values provide a reasonable balance for the simulated steady-state water budget. Simulations show that surface water flow is the ultimate source of about 75% of pumped water for six scenarios of possible future ground-water development. Model simulations indicate that changes from agricultural to urban land uses could decrease the loss of Carson River outflow to pumpage when streamflow is not used for flood irrigation in that area.