**4. Conclusions**

Based on the context of Israel, this paper shows that the management of irrigation water within the agricultural sector affects the optimal management of water in the water supply sector, and vice versa, and hence, the importance of accounting for the interrelationships between these sectors in the evaluation of economic damage due to irrigation water salinity. We used a mathematical programming model of the Israeli agriculture and water sectors to compare two intraregional irrigation water blending methods: blending at the field level, which enables a specific water salinity to be set for every crop, and regional blending, under which all crops obtain water with the same salinity. We found that enabling field-level blending reduces the land allocated to salinity-sensitive crops and increases welfare by USD 0.08 per cubic meter, which is about 20% of the average VMP for irrigation water. However, blending has been found to be suboptimal; this means that the welfare losses associated with regional blending could be avoided if regions were separated into sub-regions, each assigned to a different water type and a different set of crops. We evaluate the average salinity damage per cubic meter to be in the range of USD 0.30 to USD 0.42 per dS m−<sup>1</sup> depending on the method employed to evaluate the damage and the irrigation water blending scenario.
