The study investigates different institutional and economic factors that can induce farmers to adopt efficient irrigation technologies in the irrigated agriculture of Uzbekistan. To investigate the effect of different policies on the investment of efficient irrigation technology, we simulate different scenarios of institutional design of the cotton procurement policy and land tenure security using a farm-based optimization model that maximizes the total net benefit of a farmer. The results indicate that a flexible water price can increase the adoption rate of efficient irrigation technologies by 20% compared to fixed water price levels. However, the high water supply variability may nevertheless delay the adoption of an efficient technology. Likewise, the removal of the cotton yield-based target could increase the adoption rate of water-efficient technologies. Finally, farmers are likely to respond much stronger to flexible water pricing, when the risk of losing land is lower.