A three dimensional baroclinic mathematical model is presented to compute the water levels and water particle velocity distributions in stratified coastal waters. The model system consists of hydrodynamic, transport and turbulence models. In the hydrodynamic model component, the Navier-Stokes equations are solved with the hydrostatic assumption and the Boussinesq approximation. The transport model consists of the pollutant transport model and the water temperature and salinity transport model. The variations in the water temperature and salinity influence the water density, and in return the velocity field. In the transport model the three dimensional convective diffusion equations are solved. As the turbulence model, a two-equation kappa-epsilon turbulence model is applied. The solution method is a composite finite difference-finite element method. In the horizontal plane finite difference approximations and in the vertical plane finite element shape functions are used. The developed model is applied to Oludeniz Lagoon located at the Mediterranean coast of Turkey.