Abstract. Computational experiments are performed to evaluate the effects of locally heterogeneous conductivity fields on regional exchanges of water between stream and aquifer systems in the Middle Heihe River basin (MHRB) of northwestern China. The effects are found to be nonlinear in the sense that simulated discharges from aquifers to streams are systematically lower than discharges produced by a base model parameterized with relatively coarse effective conductivity. A similar, but weaker, effect is observed for stream leakage. The study is organized around three hypotheses: (H1) small-scale spatial variations of conductivity significantly affect regional exchanges of water between streams and aquifers in river basins, (H2) aggregating small-scale heterogeneities into regional effective parameters systematically biases estimates of stream–aquifer exchanges, and (H3) the biases result from slow paths in groundwater flow that emerge due to small-scale heterogeneities. The hypotheses are evaluated by comparing stream–aquifer fluxes produced by the base model to fluxes simulated using realizations of the MHRB characterized by local (grid-scale) heterogeneity. Levels of local heterogeneity are manipulated as control variables by adjusting coefficients of variation. All models are implemented using the MODFLOW (Modular Three-dimensional Finite-difference Groundwater Flow Model) simulation environment, and the PEST (parameter estimation) tool is used to calibrate effective conductivities defined over 16 zones within the MHRB. The effective parameters are also used as expected values to develop lognormally distributed conductivity (K) fields on local grid scales. Stream–aquifer exchanges are simulated with K fields at both scales and then compared. Results show that the effects of small-scale heterogeneities significantly influence exchanges with simulations based on local-scale heterogeneities always producing discharges that are less than those produced by the base model. Although aquifer heterogeneities are uncorrelated at local scales, they appear to induce coherent slow paths in groundwater fluxes that in turn reduce aquifer–stream exchanges. Since surface water–groundwater exchanges are critical hydrologic processes in basin-scale water budgets, these results also have implications for water resources management.