Water shortage is one of the factors limiting crop production in the arid and semi-arid regions. In such circumstances, to obtain the maximal utilization of a unit volume of water, one may not use classic rules of determining water requirement in plants. Hence, water must be applied to crop up to a necessary but not sufficient amount, i.e, to the point where the returns per unit volume of water is maximum with crop yield being acceptable. To determine the optimal water use, the effect of deficit irrigation on cotton crop was studied in Gorgan area in 1998. A completely randomized block design of 6 treatments and 3 iterations was employed. Yield, cost and profit functions were derived for different levels of water use. Although maximum yield was obtained through applying complete needed irrigation, to obtain the highest profit per hectare an eight percent reduction in water use must be considered. The highest profit per unit volume of water was obtined when water use was decreased by 16.7 percent. For the profit in deficit irrigation to be equal to that in complete irrigation in the cases of either land or water being limitted, water use must be reduced by 16 and 51 percent relative to complete irrigation, respectively.
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