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The Perdido and Wolf Bay system in Alabama, USA, is an estuarine system linking the freshwater from the Perdido and Wolf Bay watersheds and the tidal saltwater from the Gulf of Mexico through Perdido Pass, Dolphin Pass, and the Gulf Intracoastal Waterway. A three dimensional hydrodynamic model using Environmental Fluid Dynamics Code (EFDC) was developed and used to analyze complex and dynamic flow, salinity, and temperature distributions in the system. The external driving forces for the model include the river discharges from natural and urban watersheds, atmospheric winds, and astronomical tidal elevations at the open boundaries where flow exchange takes place. Simulated water surface elevation, temperature, and salinity were compared against the field data at several observation stations in 2008 and 2009 with good agreement (coefficient of determination R2 = 0.92 between the measured and the modeled water surface elevations). The calibrated EFDC model was used to examine responses of the system to high, mean, and low inflows from streams and the sea level rise in the open boundaries under climate change. The concept of the age of water was applied to understand pollutant transport in the system. The age of water reveals dynamic and complex interactions between tides from the Gulf of Mexico and inflows from the streams. The age of water is less than 20 days under the 2-year high inflows and up to 160 days under 7Q10 low inflows. Under mean inflow conditions, the age of the tracer released from Wolf Bay is 50–70 days in the lower Perdido Bay and larger than that in the upper Perdido Bay, indicating a strong interaction between tides and inflows, which results in recirculation of flow and pollutants. The age of water is projected to increase up to 60 days under estimated sea level rise scenarios.