Increased size of farm machinery has improved farm efficiency but at the risk of soil compaction. Here we present a novel approach investigating the effect of compaction due to in-field traffic by continuously monitoring crop canopy temperature and soil profile moisture and measuring crop yield in individual crop rows to determine the economic impact on cotton farming systems. Traffic by a tractor weighing 19.2 Mg either side of the plant row reduced lint yield by 27 % due to lower crop height, leaf area, biomass and fruit number. Elevated canopy temperature (Tc) in the compacted plots resulted in 30 % higher stress time (i.e. cumulative time when Tc is higher than the optimum Tc for cotton growth) compared with the non-compacted plots. Higher stress time in compacted plots was correlated with a 72 % and 27 % reduction in crop water use (estimated from change in soil water) at 0.3−0.5 m and 0.5 – 0.7 m depths, respectively. Water recharge in the soil profile from irrigation and rainfall was reduced by 16 % due to compaction with the highest reduction being 86 % at 0.3 – 0.5 m depth. These results demonstrate that compaction likely reduced root access to water below 0.3 m inducing water stress resulting in yield reduction. Tractors used for farm operations only compact one side of the bed, however, both sides are compacted in the absence of permanent wheel tracks. By comparison a dual tyre round module cotton picker weighing ∼32 Mg compacts 67 % of the rows on both sides and 33 % on one side suggesting greater economic loss in the following season compared to that estimated from the current study. Reductions in soil water recharge following irrigation and rainfall events due to compaction will further decrease farm efficiency and profitability. To our knowledge this is the first study related to soil compaction in any crop to show the direct relationship between yield, plant stress time and soil water dynamics at specific depths in profile. It is suggested that short term agronomic decisions (eg irrigation scheduling) need to be considered differently where compaction has been identified as limiting productivity. We recommend case studies be conducted to monitor the effect of compaction on commercial farm productivity and to demonstrate the cost of compaction across agricultural industries to drive practice change. Demonstrating the potential economic consequences of soil compaction by the integrated approach used in this study may encourage practice change to minimize compaction on farms.