The physical basis for the "hydrophobic effect" is studied using a simple statistical mechanical model of water, the "MB" model, in which water molecules are represented as Lennard-Jones disks with hydrogen bonding arms. Using a four-state framework developed by Muller [Acc. Chem. Res. 23, 23 (1990)], and extended by Lee and Graziano [J. Am. Chem. Soc. 118, 5163 (1996)], we find the model reproduces the fingerprints of hydrophobicity, namely, the large positive heat capacity, and temperatures TH and TS at which the enthalpy and entropy of transfer, respectively, are zero. Further, the behavior can be interpreted readily in terms of hydrogen bonds that are either made or broken in the bulk or in the first solvation shell around a nonpolar solute. We find that inserting a nonpolar solute into cold water causes ordering and strengthening of the H bonds in the first shell, but that the reverse applies in hot water. This provides a physical interpretation for the crossover temperatures TH and TS.