LAUSR

Irrigated agricultural sectors in many countries are facing the challenge of low crop yields and this trend is made worse by inequality of water allocation among water users. This paper analyses prospects for equitable allocation of canal and groundwater to improve livelihoods of farmers by increasing crop production and reducing the negative effect of groundwater salinity on crop yield. Using data from farm surveys conducted in the 2010 and 2012 cropping seasons in the Lower Chenab Canal (LCC) irrigation system in Pakistan, this study uses econometric models to analyse crop productivity under different water‐use scenarios. The results show that the distributary at the head location of the system can extract more of the groundwater while the one at the tail end of the system should utilize more of the canal (surface) water. Further, an input‐oriented data envelope analysis (DEA) was conducted to measure the efficiency of resources use related to the crops produced in the study area. The DEA estimates show that farmers at the tail end of the system are more efficient in relation to resource use. A redistribution of the water use (optimal scenario) can therefore improve groundwater quality, water productivity and crop productivity in the system. © 2020 John Wiley & Sons, Ltd.