Previous land surface modeling efforts to predict and understand water budgets in the U.S. Southeast for soil water management have struggled to characterize parts of the region due to an extensive presence of fragipan soils for which current calibration approaches are not adept at handling. This study presents a physically based approach for calibrating fragipan-dominated regions based on the “effective” soil moisture capacity concept, which accounts for the dynamic perched saturation zone effects created by the low hydraulic capacities of the fragipan layers. The approach is applied to the Variable Infiltration Capacity model to develop a hydrologic model of the Obion River Watershed (ORW), TN, which has extensive fragipan coverage. Model calibration was performed using observed streamflow data, as well as evapotranspiration and soil moisture data, to ensure correct partitioning of surface and subsurface fluxes. Estimated Nash-Sutcliffe coefficients for the various sub-drainage areas within ORW were all greater than 0.65, indicating good model performance. The model results suggest that ORW has a high responsivity and high resilience. Despite forecasted temperature increases, the simulation results suggest that water budget trends in the ORW are unlikely to change significantly in the near future up to 2050 due to sufficient precipitation amounts.