Water resources policy analysis deals with the protection of people from the harmful effects of water and assurance of a consistent, adequate supply of usable water. Population and regulatory pressures, political and economic instabilities, and climatic variations can all be expected to further stress water supply resources. Developing policy for managing water systems for human needs in such an environment is difficult, slow, and very costly. The approach to water resources policy analysis developed in this paper is that of the rational decision maker who lays out goals and uses logical processes to explore the best way to reach those goals. The decision maker may be an individual or a group. The emphasis in this paper is on how water resources decisions ought to be analyzed and made. In establishing this framework we are proposing integration of object‐oriented modeling approach with systems analysis. Our concern here is with how the water policy analysis process should be structured to best address a policy choice, and with the object‐ oriented model that will aid understanding and prediction. The proposed approach is illustrated in the paper by the case study of water resources policy analysis for Egypt.