River-aquifer exchange is considered within a transition probability framework along the Rio Grande in Albuquerque, New Mexico, to provide a stochastic estimate of aquifer heterogeneity and river loss. Six plausible hydrofacies configurations were determined using categorized drill core and wetland survey data processed through the TPROGS geostatistical package. A base case homogeneous model was also constructed for comparison. River loss was simulated for low, moderate, and high Rio Grande stages and several different riverside drain stage configurations. Heterogeneity effects were quantified by determining the mean and variance of the K field for each realization compared to the root-mean-square (RMS) error of the observed groundwater head data. Simulation results showed that the heterogeneous models produced smaller estimates of loss than the homogeneous approximation. Differences between heterogeneous and homogeneous model results indicate that the use of a homogeneous K in a regional-scale model may result in an overestimation of loss but comparable RMS error. We find that the simulated river loss is dependent on the aquifer structure and is most sensitive to the volumetric proportion of fines within the river channel. Copyright 2010 by the American Geophysical Union.