*Crop Water Use Efficiency*

In general, water management includes issues relating to five sub-systems existing on most irrigated farms: supply systems, on-farm storage systems, on-farm distribution systems, application systems, and recycling systems [11]. In a report on the Australian cotton industry, Dalton et al. [11] defined water use efficiency at the farm level by focusing on three dimensions: agronomic efficiency, economic efficiency, and volumetric efficiency. The agronomic water use efficiency includes a gross production water use index (yield/total water applied), an irrigation water use index (yield/irrigation water applied), a marginal irrigation water use index (marginal yield due to irrigation/irrigation water applied), and a crop water use index (yield/evapotranspiration). The economic water use efficiency includes a gross production economic water use index (total value/total water applied), an economic irrigation water use index (value/irrigation water applied), a marginal economic irrigation water use index (value due to irrigation/irrigation water applied), and a crop economic water use index (value/evapotranspiration). The volumetric water use efficiency includes the overall project efficiency, conveyance efficiency, distribution efficiency, and field application efficiency, which emphasize irrigation uniformity to avoid over- and under-irrigation issues (reducing the water use efficiency and yield, respectively). Moreover, Pereira [24] discussed various measurements for both distribution uniformity and application efficiency in various irrigation systems.

From a multi-disciplinary perspective, Nair et al. [25] reviewed the efficiency of irrigation water use. Among all the measures of WUE, agronomists defined it as yield per unit area divided by the water used to produce the yield. The yield can be grain yield or the total aboveground biomass depending on the use of the crop produced, and the water can refer to crop evapotranspiration, soil water balance, or precipitation plus irrigation. However, from an economist's perspective, the efficient level of irrigation water occurs "when the marginal revenue (the price of the crop produce in a perfectly competitive market) is equal to the price of water" [25]. The water application level at Stage II in the classical production function was identified as the economically efficient water use amount. Stage II ranges from the point

where the marginal physical product (MPP) equals the average physical product (APP), i.e., *w*/*p* = *Y*/*X* (*MPP* = *APP*) with *w* being the water cost, *p* being the output price, *Y* being the output quantity, and *X* being the input quantity, to the yield maximizing point, where *dY*/*dX* = *w*/*p* = 0 (i.e., *MPP* = 0). Other researchers proposed an operating profit water use index to evaluate the water use efficiency, which is defined as (*R* − *VC* − *OC*)/*WU* with *R* being the gross return, *VC* being the variable costs, *OC* being the overhead costs, and *WU* being the total amount of water used [26].

Comparing the WUE measures from perspectives of agronomists and economists, a major difference is whether to consider the output price. For example, the economic irrigation water use index (value of crop or grains/irrigation water applied) is the product of the irrigation water use index (yield/irrigation water applied) and the crop price. Because producers are price takers in a competitive market, different farmers growing the same crop will sell it for the same price in the same market. Thus, exogenous variables affecting economic irrigation efficiency and agronomic irrigation efficiency will have the same effects in terms of signs and significance levels, though the magnitude will be different proportionally. To make the analyses easier and follow the mainstream of decision-making on land allocation and water use in order to maximize the expected profit as formulated in the model section below, this study uses the economic measure of irrigation water use efficiency (*EIWUE*) (crop value/irrigation water use), incorporating state-average crop prices in the econometric estimation.

Various approaches have been explored to conserve irrigation water use, such as developing new irrigation techniques [27]; increasing investment in irrigation infrastructure such as canals, wells and drip systems [16]; and designing water conservation policies [28]. Water-conserving irrigation systems have been proposed and applied to various crops in many farming areas around the world. For instance, in eastern Australia [29], arid and semi-arid areas in China [16,30], and southern and southwestern U.S. [15,31,32]. Examples include pressure (or pressurized) irrigation systems (versus gravity irrigation methods), such as linear move, center pivot, sprinkler, and drip irrigation methods. Field experiments with sprinkler and drip irrigation and their comparison with traditional flood or furrow irrigation have been conducted on various crops worldwide [14,33–36]. As a result, a substantial amount of water could be saved using enhanced irrigation systems and crop irrigation water use efficiency can be improved.
