Water Productivity (WP) of a crop defines the relationship between the economic or physical yield of the crop and its water use. With this concept it is possible to identify disproportionate water use or water-limited yield gaps and thereby support improvements in agricultural water management. However, too often important qualitative and quantitative environmental factors are not part of a WP analysis and therefore neglect the aspect of maintaining a sustainable agricultural system. In this study, we examine both the physical and economic WP in perspective with temporally changing environmental conditions. The physical WP analysis was performed by comparing simulated maximum attainable corn yields per unit of water using the crop model Hybrid-Maize with observed data from 2005 through 2013 from 108 farm plots in the Central Platte and the Tri Basin Natural Resource Districts of Nebraska. In order to expand the WP analysis on external factors influencing yields, a second model, Maize-N, was used to estimate optimal nitrogen (N)-fertilizer rate for specific fields in the study area. Finally, a vadose zone flow and transport model, HYDRUS-1D for simulating vertical nutrient transport in the soil, was used to estimate locations of nitrogen pulses in the soil profile. The comparison of simulated and observed data revealed that WP was not on an optimal level, mainly due to large amounts of irrigation used in the study area. The further analysis illustrated year-to-year variations of WP during the nine consecutive years, as well as the need to improve fertilizer management to favor WP and environmental quality. In addition, we addressed the negative influence of groundwater depletion on the economic WP through increasing pumping costs. In summary, this study demonstrated that involving temporal variations of WP as well as associated environmental and economic issues can represent a bigger picture of WP that can help to create incentives to sustainably improve agricultural production.