A methodology for the economic optimization of conjunctive use of surface and groundwater at the river basin scale and monthly time detail is presented. The use of an economic objective function, maximizing the net economic value of water use in the system along the time horizon, allows generation of solutions that optimize economic efficiency in water resources management. Integrated river basin modeling with distributed groundwater simulation and dynamic stream-aquifer interaction allows a more realistic representation of conjunctive use and associated economic results. Parameter-distributed groundwater simulation is embedded into the global model using the Eigenvalue Method, which allows ready and efficient transient simulation of aquifers in conjunctive use optimization models with significant computational advantages. For cases in which there is no need of a detailed knowledge of the spatial and temporal evolution of the aquifer, the Embedded Multireservoir Model provides a parsimonious way to model stream-aquifer interaction, even in the case of complex karstic aquifers. A non-linear hydroeconomic optimization model has been developed for the Adra river basin system (Spain). Appropriate constraints are included to guarantee feasibility of the resulting system operation and maintenance or achievement of a good groundwater quantitative status. The model offers a great variety of economic and hydrologic results (flows, storages, scarcity and operating costs, marginal values, etc.) useful for a preliminary search of strategies to improve water management and system operation or to plan system capacity expansion, with significant economic benefits. The net benefits of water allocation flexibility and optimal conjunctive use operation can be assessed by comparing the results of the optimization models with the results of a simulation model that reproduces the actual operating rules of the system (e.g. the priority system for water allocation among competing uses).