This study examined the effects of different water management strategies on red pepper (Capsicum annuum L.cv. Kapija) crop evapotranspiration (ETc), yield and fruit quality. The study was conducted in the Bafra Plains in Northern Turkey over a two-year period (2010-2011). Three irrigation treatments [1 full (S1) and 2 deficit (70%-S2, 40%-S3)] and 1 rainfed treatment (S4) were applied. Soil water budget calculations used a detailed, iterative approach to identify ETc of wetted and vegetation-covered parts of the field (ETcrz), i.e. the "root zone", and a new equation was used to convert ETcrz values to ETc values for the entire plot in order to improve the accuracy of ETc measurements for drip-irrigated crops. ETc values of the treatments varied between 294.0-472.0 mm in 2010 and 163.0-508.0 mm in 2011. The maximum yield was obtained with the S1 treatment (42.43 t ha(-1)). Statistical analysis showed the S1 treatment to have a significantly higher yield than all other treatments, while the difference in the yields of the S3 and S4 treatments was not statistically significant. Calculations of water Use efficiency (WOE), net economic income (NIC) and financial efficiency (FE) indicated that under rainfed conditions, despite the high WUE (11.9 kg m(-3)), NIC from red pepper cultivation would be below that of production costs. FE analysis indicated the most profitable strategy for red pepper cultivation to be full irrigation (S1), which had an FE value of 1.6 ($m(-3)), whereas both the S3 and S4 treatments had negative FE values ranging between -1.2 and -2.1 ($m(-3)).