Abstract: A method and system for producing 1,4-butanediol (1,4-BG), and optionally additionally tetrahydrofuran (THF), that promotes more efficient usage of water (H2O) is provided. In one aspect, the method is comprised of supplying at least one feed stream including 1,4-diacetoxybutane (1,4-DAB), 1,4-hydroxyacetoxybutane (1,4-HAB) and H2O to at least one reactor. 1,4-DAB, 1,4-HAB and H2O are reacted in the reactor to produce at least one effluent stream that includes 1,4-BG, 1,4-HAB, H2O, unreacted 1,4-DAB and acetic acid. The effluent stream is supplied to a separation system having one or more separators where at least a portion of the 1,4-HAB is removed from the effluent stream and recycled back to the reaction. Alternatively, 1,4-HAB may be supplied directly to the reactor as a feed stream, or a combination of feed stream and recycled 1,4-HAB may be used.