Water-saving rice production systems including alternate wetting and drying (AWD) and aerobic rice (AR) are being increasingly adopted by growers due to global water crises. Application of natural and artificial mulches may further improve water economy of water-saving rice production systems. Conventionally flooded rice (CFR) system has been rarely compared with AWD and AR in terms of economic returns. In this 2-year field study, we compared CFR with AWD and AR (with and without straw and plastic mulches) for the cost of production and economic benefits. Results indicated that CFR had a higher production cost than AWD and AR. However, application of mulches increased the cost of production of AWD and AR production systems where plastic mulch was expensive than straw mulch. Although the mulching increased the cost of production for AWD and AR, the gross income of these systems was also improved significantly. The gross income from mulched plots of AWD and AR was higher than non-mulched plots of the same systems. In conclusion, AWD and AR effectively reduce cost of production by economizing the water use. However, the use of natural and artificial mulches in such water-saving environments further increased the economic returns. The maximized economic returns by using straw mulch in water-saving rice production systems definitely have pragmatic implications for sustainable agriculture.