We extended a recently developed model for wave--current interactions by Lin and Huang <1996a, 1996b> to simulate the impact of topography, currents, and slanting coastlines on sea state estimates. Our formulation uses the action conservation equation and the nonlinear dispersion relation, resulting in additional flux terms, ∂(cωA)/∂ω, A∂cgλ/∂λ, A∂(cgφcos φ)/∂φ, and A∂cgθ/∂θ, compared to standard wave models such as WAM, where A is spectral action density, cω is phase velocity, and cgλ, cgφ, and cgθ are group velocities. For large-scale motions in deep water without varying currents, these effects may be neglected. However, for shallow estuary waters with varying currents, we show that these effects can cause as much as 25% variation in wave height estimates during moderate wind conditions. This phenomenon is consistent with observations and theory, for example, regarding isolated topography such as seamounts.