In this study, a management model is presented for planning groundwater development in costal deltas with paleo channels. It is demonstrated that paleo channels are the best locations for locating the wells for large-scale pumping. Groundwater flow in these aquifers is simulated using a three-dimensional (3-D) density-dependent flow and transport model SEAWAT, which is suitable for a coastal and deltaic environment. A simulation-optimization model is used to determine the optimal locations and pumpages for groundwater development for a group of production wells, while limiting the salinity below desired levels. The mixed integer problem is solved using the Simulated Annealing algorithm and the SEAWAT simulation model. A trained Artificial Neural Network (ANN) is used as the virtual SEAWAT model to perform the simulations, in order to reduce the computational burden for application of the model on desktop computers. The applicability of the model is demonstrated on a hypothetical, but near-real, delta system. © Springer Science + Business Media, Inc. 2005.