This paper presents a framework that permits an integrated analysis of a complex system in which intervene biophysical, socio-economic and policy components. A short introduction deals with the origin of this methodology, that implies a multidisciplinary approach, including soil science, agronomy, crop physiology and economics. A review of the different ways by which economists study the technical dimension of production is presented, making a comparison between the approach based on the use of econometric production functions and the engineering production functions approach. The advantages and limitations of both orientations will be briefly developed, in order to point the suitability of applying the engineering production function approach when analysing agricultural water issues. A schematic description of bio-economic models that integrate agronomic simulation models with mathematical programming models are presented. The specific case of POLEN project, realised in collaboration between IAM-Bari and IAM-Montpellier Institutes with a group of European research teams in showed as an application of this approach. New methodological developments, trying to ameliorate the performance of these models will be showed.