Achieving cost recovery is a major challenge in subsidizing water-efficient irrigation systems. This study examined the conditions, under which the Jordan Valley Authority in Jordan can recover subsidization costs by raising irrigation water tariffs while maintaining or enhancing farmers’ profit. Crop model simulations using the FAO-Aquacrop software, coupled with cost–benefit analysis, showed the degree to which irrigation system improvements enhance farmers’ yield and profit. The analysis showed that replacing sprinkler and furrow irrigation systems with water-efficient systems, such as surface drip irrigation and subsurface drip irrigation, improves yield for lemons, tomatoes, and wheat. In addition, the analysis showed that replacing sprinkler irrigation with subsurface drip irrigation allowed for the largest yield gain. It was also shown that the additional yield would enable lemon and tomato farmers to pay higher tariffs, allowing full cost recovery for the irrigation system improvements. For example, in the simulation scenario, where sprinkler irrigation is replaced with surface drip irrigation for tomato production, it was shown that the current water tariff of 0.024 JOD/m3 can be increased up to 1.62 JOD/m3, as a consequence of increased yield without reducing farmers’ profit (1 JOD = 1.41 USD). For wheat, however, there was no tariff that enables full cost recovery while maintaining farmers’ profit. To actualize the possible tariff, increase for lemon and tomato farmers, strictly regulating water extraction among farmers and providing them with sufficient time for adaptation will be necessary.