In a large pot or Dutch oven, melt the butter over medium-high heat.
Add the beef and cook until browned on all sides, about 5-7 minutes.
Add the chopped onion, carrots, celery, and parsnip. Cook until the vegetables are soft, about 5-7 minutes.
Add the flour and paprika, stir well to coat the meat and vegetables.
Add the water, beef broth, salt, black pepper, and bay leaf to the pot. Stir well to combine.
Bring the stew to a boil, then reduce the heat to low and cover. Simmer for about 2-6 hours, or until the beef is tender.
Add the chopped potatoes to the pot and cook until tender, about 30-40 minutes.
Remove the bay leaf and stir in the sour cream. Adjust the seasoning as necessary.
Serve hot with crusty bread.