Sensors and sensor networks play an important role in decision-making related to water quality, operational streamflow forecasting, flood early warning systems, and other areas. In this paper we review a number of existing applications and analyse a variety of evaluation and design procedures for sensor networks with respect to various criteria. Most of the existing approaches focus on maximising the observability and information content of a variable of interest. From the context of hydrological modelling only a few studies use the performance of the hydrological simulation in terms of output discharge as a design criterion. In addition to the review, we propose a framework for classifying the existing design methods, and a generalised procedure for an optimal network design in the context of rainfall-runoff hydrological modelling.