Abstract: Ecological and economic costs of over-exploitation of groundwater was estimated by using a renew-expense method and a cost-substitute method. Results indicate that irrigation cost increases by 12.638 million Yuan because of falling groundwater level in Luancheng County, which is 1.2% of crop GDP in 2000. Cost of eliminating pollution brought about by falling groundwater level is 15.122 million Yuan, which is 1.4% of crop GDP in 2000. Average shadow value of groundwater over-exploitation is 79.876 million Yuan, which is 7.3% of crop GDP and 3.7% of agricultural GDP. Total economic benefit of crops drops to 170.479 million Yuan(calculated by GGDP)and 71.6% of the results are obtained by traditional calculation method.