Most semi-distributed watershed water quality models divide the watershed into hydrologic response units (HRU) with no flow among them. This is problematic when watersheds are delineated to include variable source areas (VSAs) because it is the lateral flows from upslope areas to downslope areas that generate VSAs. Although hydrologic modellers have often successfully calibrated these types of models, there can still be considerable uncertainty in model results. In this paper, a topographic-index-based method is described and tested to distribute effective soil water holding capacity among HRUs, which can be subsequently adjusted using the watershed baseflow coefficient. The method is tested using a version of the Soil and Water Assessment Tool (SWAT) model that simulates VSA runoff and is applied to two watersheds: a New York State (NYS) watershed, and one in the head waters of the Blue Nile Basin (BNB) in Ethiopia. Daily streamflow predicted using effective soil water storage capacities based only on the topographic index were reassuringly accurate in both the NYS watershed (daily Nash Sutcliffe (E) = 0·73) and in the BNB (E = 0·70). Using the baseflow coefficient to adjust the effective soil water storage capacity only slightly improved streamflow predictions in NYS (E = 0·75) but substantially improved the BNB predictions (E = 0·80). By comparison, the standard SWAT model, which uses the traditional look-up tables to determine a runoff curve number, performed considerably less accurately in un-calibrated form (E = 0·51 for NYS and E = 0·45 for BNB), but improved substantially when explicitly calibrated to streamflow measurements (E = 0·76 for NYS and E = 0·67 for the BNB). The calibration method presented here provides a parsimonious, systematic approach to using established models in VSA watersheds that reduces the ambiguity inherent in model calibration. Copyright © 2011 John Wiley & Sons, Ltd.