Lauren suggested me to use the above mentioned tools. Here are what I learned about those tools through ArcGIS10 Help.
Generate Spatial Weights Matrix: Constructs a spatial weights matrix (.swm) file to represent the spatial relationships among features in a dataset.
Generate Network Spatial Weights: Constructs a spatial weights matrix file (.swm) using a Network dataset, defining feature spatial relationships in terms of the underlying network structure.
Note, you have to turn on Network Analyst Extensions to use this tool.
It seems like I have to manually assign the relationship of each network, which sounds like a very cumbersome work as there are more than 100,000 streams to deal with. I may be able to utilize fdr (the output of FlowDirection) to expedite the process.
Stay tuned!
Did you get it to work by using FlowDirection?
Greer,
Not yet. But that would be my next step. So I can use it as a spatial weighting input for GWR. As you know NHD plus comes with FDR. Even if the fdr does not work, it is a relatively fast operation to create a fdr layer in ArcGIS for the size of my study site. It should be manageable. I will let you know how that works!