Inverse modeling studies employing data collected from the classic Henry seawater intrusion problem give insight into several important aspects of inverse modeling of seawater intrusion problems and effective measurement strategies for estimation of parameters for seawater intrusion. Despite the simplicity of the Henry problem, it embodies the behavior of a typical seawater intrusion situation in a single aquifer. Data collected from the numerical problem solution are employed without added noise in order to focus on the aspects of inverse modeling strategies dictated by the physics of variable-density flow and solute transport during seawater intrusion. Covariances of model parameters that can be estimated are strongly dependent on the physics. The insights gained from this type of analysis may be directly applied to field problems in the presence of data errors, using standard inverse modeling approaches to deal with uncertainty in data. Covariance analysis of the Henry problem indicates that in order to generally reduce variance of parameter estimates, the ideal places to measure pressure are as far away from the coast as possible, at any depth, and the ideal places to measure concentration are near the bottom of the aquifer between the center of the transition zone and its inland fringe. These observations are located in and near high-sensitivity regions of system parameters, which may be identified in a sensitivity analysis with respect to several parameters. However, both the form of error distribution in the observations and the observation weights impact the spatial sensitivity distributions, and different choices for error distributions or weights can result in significantly different regions of high sensitivity. Thus, in order to design effective sampling networks, the error form and weights must be carefully considered. For the Henry problem, permeability and freshwater inflow can be estimated with low estimation variance from only pressure or only concentration observations. Permeability, freshwater inflow, solute molecular diffusivity, and porosity can be estimated with roughly equivalent confidence using observations of only the logarithm of concentration. Furthermore, covariance analysis allows a logical reduction of the number of estimated parameters for ill-posed inverse seawater intrusion problems. Ill-posed problems may exhibit poor estimation convergence, have a non-unique solution, have multiple minima, or require excessive computational effort, and the condition often occurs when estimating too many or co-dependent parameters. For the Henry problem, such analysis allows selection of the two parameters that control system physics from among all possible system parameters.