Expected future water shortages and emerging environmental concerns place micro­irrigation near the forefront of technological alternatives for the agricultural sector. Drip irrigation-under favorable soil, biological, climatic, organizational, and economic conditions -is economically preferred to traditional flood, furrow, and even sprinkler technologies. However, superior management is required to produce the incremental yield increases necessary for acceptable returns on this investment. Other incremental benefits from adopting drip technology are realized through complementarities between the technology, other inputs, and the firm's marketing strategy.