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The greatest water consumption takes place during irrigation of and and semiarid areas, therefore, water resource management is fundamental for sustainability. For correct management, several tools and decision-making systems are necessary while paying close attention to aspects such as profitability, water cost, etc. Water resources are scarce and some of them are of low quality. This extremely delicate situation occurs in some regions of the world and it explains increasing water cost. In Europe, the policies relating to water use (2000/60/EC) pay particular attention to the need of its protection and conservation. To ensure this, a large number of measures, including the establishment of prices which really correspond to their usage costs, have been set forth. Water subsidies are relatively important in all European countries. In this study, a specific methodology is applied to a Spanish semi-arid region. It is useful and easy to apply, not only by farmers, but also by water managers and politicians in charge of policy. The methodology also helps in the decision-making process about water cost in agriculture. In this area (Hydrogeological System 08.29, Spain), the resources are mainly underground water with a high variable cost and without any direct subsidies. This model allows us to analyse the effect of different water costs and to find the optimum strategy giving the maximum gross marg,,in in line with water cost and its main determining factors (irrigation system, climatic variability, etc.).

The methodology is based on the effect of irrigation on crop yield with its production function, integrating the effect of application efficiency. In this way, a relationship between gross margin and gross irrigation depth is obtained. Working with permanent irrigation systems and four crops (barley, garlic, maize and onion), the main conclusion is that the optimum gross irrigation depths are always fewer than those necessary for maximum crop yield and when irrigation depths are fewer water cost increases. Irrigation depths, which maximise the economic efficiency in the use of water (e m(-3)), are fewer than those which maximise the gross margin; therefore, this aspect must be considered in irrigation scheduling. The results also show important differences among crops, depending on their water requirements and their economic profitability. (C) 2003 Elsevier B.V. All rights reserved.