Effective management of scarce water resources requires a system approach. Starting at the source of water, a cascade of events leads to the final production of crops or animal products at the expense of water. These events are mostly sequential, with each process step in the sequence having its own efficiency of output per unit of input. Using a simple sequence of three hypothetical steps, it is shown that the overall efficiency of a process is the product of the efficiencies of each sequential step. That is, efficiencies of individual process steps are multiplicative in determining the overall efficiency. Thus, improvement in any one of the efficiency steps has equal effect in improving the overall efficiency, and the overall improvement is more than the sum of the individual improvements. This principle provides a simple and quantitative means to optimize the allocation of limited resources in improving water use efficiency. Crop production in relation to water use is considered in terms of the pertinent sequence of efficiency steps for irrigated conditions. Rainfed conditions will be considered in another presentation in the Rainfed and Drought session. Efficiency steps and the sequences are outlined and discussed and the likely improvements assessed quantitatively for some scenarios. The universal applicability of this approach to different cropping as well as animal production systems when water is limiting is emphasized.