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The twin problems of waterlogging and soil salinity are endangering more than 33% of the crop area in arid and semi-arid regions of Haryana State, India. Provision of subsurface drainage and conservation of good quality water either from the canal system or the rains for teaching purposes have been established experimentally as feasible management strategies for abating these problems. However, disposal of highly saline drainage effluent is a serious management problem. Recycling of drainage water for irrigation is recognised as one alternative means of disposal. The present study, therefore, attempts to study long run yield responses of wheat to irrigation water salinity and quantity in addition to the method of irrigating wheat crop. Further, an econometric framework is developed to assess mixing of saline drainage water with good quality canal water to irrigate the wheat. The study highlights the fact that through subsidising the price of saline drainage water, a fairly good substitution between drainage and canal water can possibly be enhanced which ultimately results in a favourable shift in crop income and a substantial saving of precious canal water.