Sustainable agriculture depends on effective water management in arid and semi-arid regions facing water scarcity and salinity challenges. This study develops a multi-scale system dynamics model to evaluate the interactions between irrigation policy scenarios and regional economic balances across the Shapour River Basin, comparing infrastructure-oriented, demand management, and hybrid scenarios. The model simulates salinity accumulation and soil-water dynamics at the district level, while capturing basin-wide crop yields, agricultural economics, and water use. Computational results reveal that while demand management alone (scenario 4) outperforms the first three irrigation technology-focused scenarios (scenarios 1-3) with 10 % more enhancements in net economic profit and water economic value and reflects rebound effect of these infrastructure-only policies, the hybrid scenario (scenario 5) that combines both demand management and technology improvement proves most effective, delivering the highest economic returns with 77 % improvements and achieving significant reductions in water use up to 56 % compared to the status quo. These findings showcase the diminishing effectiveness of infrastructure-focused approaches while highlighting the superior performance of the integrated strategies. This demonstrates that the combination of demand management, irrigation technology, and regional economic equity leads to sustainable outcomes. They offer not only actionable guidance for policymakers in the study region, but also a valuable contribution to the global discourse on moving beyond infrastructure-centric approaches in arid and semi-arid agriculture.