2 ABSTRACT : The study was conducted to estimate the land and water productivity in marginal areas of Punjab. Nine tehsils of Pothwar Plateau were selected as study area. Data were collected during 2002-03 and it was found that in rainfed agriculture, wheat yield was 1451 kg per hectare with gross margins of Rs. 4607 per hectare. Groundnut yield was 864 kg per hectare with gross margin of Rs. 11149 per hectare. The overall gross margins were Rs. 6956 per hectare. In irrigated agriculture, wheat yield was 3084 kg per hectare with gross margin of Rs.15414 per hectare. Groundnut yield was 1402 kg per hectare with gross margin of Rs.17831 per hectare. The overall gross margin in irrigated agriculture was Rs. 8368 per hectare. The value of water was Rs.13.42/m 3 , Rs.18.60/m 3 , Rs.12.24/m 3