A water-focused computable general equilibrium and microsimulation models were applied to analyze the economywide and distributional impacts of the multipurpose Mwache dam investment in the coast region of Kenya. The results show that the dam is likely to contribute to the regional economic growth with highest results under the combined allocation scenario of 80 percent for domestic users and nonagricultural economic sectors and 20 percent for irrigation purposes. In the coast region, water allocation to agriculture is key for inclusive growth and poverty reduction. With irrigation water, increased production of maize, pulses, oil crops, fruits, and vegetables in the hitherto drought-prone region fuels agricultural productivity growth that benefits the regional and national economies. Thus, allocation of water to irrigation can have considerable effects on food availability and food and nutritional security in the region, which suffers from persistent food deficits. Provision of domestic water supply is necessary but not sufficient for overcoming extreme poverty. Increased water availability benefits all industries operating in the coast region, in particular, those relatively more intensive in water.