Abstract: The aim of the study was to investigate how farmers could sustain an economically viable agricultural production in salt-affected areas of Oman. The problem of salinity in the Batinah coastal area, Oman, dates back to the 1990’s with the major identified cause being excessive groundwater abstraction. Seawater intrusion in the Batinah aquifers is still advancing at an alarming pace. The present study estimates the on-farm economic losses caused by salinity. The study is based on a sample of 112 farms. Farms were divided into three groups according to the soil salinity levels, low salinity, medium salinity and high salinity. Linear programming was used to maximize each type of farm’s gross margin under water, land and labor constraints. The economic losses incurred by farmers due to salinity were estimated by comparing the profitability of the medium and high salinity farms to the low salinity farm’s gross margin. Results showed that when salinity increases from low salinity to medium salinity level the damage is US$ 1,604 ha-1 and US$ 2,748 ha-1 if it increases from medium salinity to high salinity level. Introduction of salt-tolerant crops in the cropping systems show that the improvement in gross margin is substantial thus attractive enough for medium salinity farmers to adopt the new crops and/or varieties to mitigate the effect of water salinity. However, in the high salinity farms the gross margin improvement is too low to encourage farmers to adopt salinity tolerant crop varieties.