Recent agroeconomic studies in water‐scarce countries such as Spain, Australia, Saudi Arabia, and Israel have revealed the economic viability of irrigating high‐value crops with desalinated water. However, the worldwide growth of large‐scale desalination capacities is primarily designed to resolve urban‐water scarcity, disregarding the impact of desalination on irrigation‐water salinity. We develop a dynamic hydroeconomic programming model where infrastructure capacities and allocations of water quantities and salinities in a regional water distribution network are endogenous. We show that subsidizing desalination is socially warranted because the associated reduction in irrigation‐water salinity is an external effect of water consumption by all water users. Empirical application to the entire state of Israel indicates that large‐scale desalination of seawater and treated wastewater for irrigation is optimal. This result stems from the large share of irrigation‐intensive salinity‐sensitive high‐value crops, motivated by Israel's policies to support local agriculture. Ignoring salinity results in a 45% reduction in desalinated irrigation water, a 29% reduction in farming profits, a 250% increase in water suppliers' profits, and an average deadweight loss of $1,200 a year per hectare of arable land.

The Jordan Valley (JV) is a critical region where the interplay of water, energy, food, and ecosystem (WEFE) dynamics presents both challenges and opportunities for sustainable development and climate change mitigation and adaptation. In such a transboundary river basin with acute nexus problems and a long history of conflicts, it is essential that conscious efforts are made to pluralize the debate and actively encourage stakeholders' empowerment, participation and fair collaboration in strategic planning. An integrated framework for participatory strategic planning in the WEFE nexus is proposed, which has been developed in the context of the JV case study. The nexus approach emphasizes decentralized, but coordinated decision making as the source of solutions, based on a clear understanding of the challenges faced. The engagement process consisted of living lab sessions where Causal Loop diagrams facilitated discussions with stakeholders by visualizing the complexity and interdependence of WEFE sectors and prioritizing the challenges faced. Community capacity assessment appraised the capacities of each community, identifying barriers to addressing their priorities. Finally, the gap analysis bridged the baseline understanding with actionable targets. The results not only highlight the pressing challenges, priorities, and leverage points for each territory but also outline pathways for fostering resilience and adaptation to the region's intertwined crises. The priorities and capacities across the three territories of the JV reveal significant disparities, reflecting the diverse socio-political, environmental, and economic contexts of the region. The methodologies and overall framework may be replicated in other regions with similar climate and challenges around the world.