Water may be viewed as both a public good and a private good with multiple uses. Its potential uses are determined by hydrology, but constrained by externalities. Its productivity can be considered from the perspective of the water user, the water system, or the river basin. It may be considered in terms of water quality, quantity and water availablility. Typically both the institutions and the policies are less than optimal.
Water productivity (WP) can be measured as water use efficiency (WUE), irrigation efficiency (IE), and economic efficiency (EE). Irrigation efficiency is the ratio of the water consumed to the water supplied. Water use efficiency is generally an obsolete term for water productivity. Water productivity is the ratio of crop output to water input. Economic efficiency measures net return, value produced minus costs incurred.
Original content derived from "Economics of Water Productivity in Managing Water for Agriculture" Randolph Baker, et al, Chapter 2 of Improving Water Productivity in Agriculture: Limits and Opportunity for Improvement International Water Management Institute