This paper introduces an Integrated Economic-Hydrologic water modeling at the basin scale that can provide essential information for policymakers in resource allocation decisions. The model is applied to the Pirapama river basin, in Pernambuco state, Northeast of Brazil. Includes essential hydrologic, institutional, agronomic and economic relationships in a unique framework in order to identify the best allocation of the disposable water resources among their multiple uses in the first segment of the basin system: before the Pirapama reservoir. Furthermore, the best allocation of the alcohol production process's effluents is also identified. The model has a significant non-linearity level and includes more than 10 thousands variables and equations, so it can be considered a complex non-linear system. The piece-by-piece method (Cai et al. 2001) is implemented using the General Algebraic Modeling System (GAMS) to solve this system. GAMS is a high level software indicated to solve mathematical programming problems. Inclusion of the economic relationships inside hydrologic models at the basin scale allows water demand and water supply simultaneous determination. Water demand and water supply are then integrated into an endogenous system and balanced based on the economic objective of maximizing benefits from water use. Both water quantity and quality are simulated in the model. The results shows the effectiveness of the model not only for water policy analysis but also like a decision support system of the hydrologic operative questions.