The dependency of surface- and groundwater flows and aquifer hydraulic properties on deformation induced by changes in aquifer head is not accounted for in the standard version of MODFLOW. A new USGS integrated hydrologic model, MODFLOW-OWHM, incorporates this dependency by linking subsidence and mesh deformation with changes in aquifer transmissivity and storage coefficient, and with flows that also depend on aquifer characteristics and land-surface geometry. This new deformation-dependent approach is being used for the further development of the integrated Central Valley hydrologic model (CVHM) in California. Preliminary results from this application and from hypothetical test cases of similar systems show that changes in canal flows, stream seepage, and evapotranspiration from groundwater (ET_gw) are sensitive to deformation. Deformation feedback has been shown to also have an indirect effect on conjunctive surface- and groundwater use components with increased stream seepage and streamflows influencing surface-water deliveries and return flows. In the Central Valley model, land subsidence may significantly degrade the ability of the major canals to deliver surface water from the Delta to the San Joaquin and Tulare basins. Subsidence can also affect irrigation demand and ET_gw, which, along with altered surface-water supplies, causes a feedback response resulting in changed estimates of groundwater pumping for irrigation. This modeling feature also may improve the impact assessment of dewatering-induced land subsidence/uplift (following irrigation pumping or coal-seam gas extraction) on surface receptors, inter-basin transfers, and surface infrastructure integrity.