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Abstract

An allowance for water use is part of the agronomic analysis implicit in the foundation of any sensible economic evaluation of crop response or change of farming system. Diminishing returns to investment in water use efficiency imply that the optimum level of investment is determined by the price of the commodity and the cost of increasing efficiency. Given a market for water, the relevant price will be that of the least valuable commodity produced at the margin of regional resources. Until water becomes liquid gold, the farm optimum will be well short of the experimental maximum. Some farm and regional possibilities for investing in increased WUE are discussed.

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