Diffuse pollution sources along a stream reach are very difficult to both monitor and estimate. In this paper, a systematic method using an optimal estimation algorithm is presented for simultaneous estimation of diffuse pollution and model parameters in a stream water quality model. It was applied with the QUAL2E model to the South Han River in South Korea for optimal estimation of kinetic constants and diffuse loads along the river. Initial calibration results for kinetic constants selected from a sensitivity analysis reveal that diffuse source inputs for nitrogen and phosphorus are essential to satisfy the system mass balance. Diffuse loads for total nitrogen and total phosphorus were estimated by solving the expanded inverse problem. Comparison of kinetic constants estimated simultaneously with diffuse sources to those estimated without diffuse loads, suggests that diffuse sources must be included in the optimization not only for its own estimation but also for adequate estimation of the model parameters. Application of the optimization method to river water quality modeling is discussed in terms of the sensitivity coefficient matrix structure.

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