With the demand for agricultural water expecting to be increased because of the expanding population growth and with water use efficiency in agricultural sector tending to be low, policy recommendations are needed to encourage farmers to increase agricultural water productivity. The main objective of this paper is to develop a spatial model that determines optimal water allocation and to generate measures of agricultural water productivity along a canal, taking into account the head versus tail disparities in water allocation along a canal. The second objective is to analyze agricultural water productivity change into its components, change in variable inputs and change in water usage, and examine the effect of efficient water usage effort on agricultural water productivity.