This paper is focused on the water use efficiency and water productivity of agricultural sector in Malta. Irrigation water demand is discussed in the view of limited water resources. The present status of agricultural water use is presented pointing out the main factors of inefficiency in the use of irrigation water such as: a) losses in the storage reservoirs; b) losses in the conveyance of irrigation water; c) low efficient on-farm irrigation methods, d) inefficiency related to the irrigation systems setup and e) losses due to inadequate irrigation practices. Water productivity is analyzed from an economic point of view through a study on economic considerations regarding markets for water in the Maltese Islands. Two scenarios (wet and dry season) are elaborated by means of crop water requirements, costs and income of agricultural production. The cultivation of crops which have low crop water requirements but have a high economic return should be encouraged together with an extensive use of treated sewage water for agriculture.