This paper analyzes optimal management strategies for farms with limited natural drainage and no access to off-farm disposal facilities. A representative farm with conditions typical of a drainage problem area in the San Joaquin Valley is considered, using a long-run steady-state model. Optimal, profit-maximizing water applications were significantly less for this farm than would be profitable for a farm with no drainage problems. Relatively high yield levels were maintained, and the required pond size was relatively small. Comparatively little crop switching occurred relative to that on a farm with unlimited natural drainage, and drainwater reuse was not profitable when all costs were considered.

Access to an off-farm disposal facility brought significant benefits, and a moderate discharge fee significantly reduced effluent volumes. A plausible amount of underground drainage flow to the farm had little effect. With uniform water applications, returns to land and management are significantly greater than with non-uniform applications, and the pond size is almost negligible. Water application levels are almost identical in the limited and unlimited drainage cases, when water is applied uniformly.