PACR of a project (7/84-9/92) to upgrade irrigated land and water management and expand the area under irrigation in hill areas of the Indian State of Himachal Pradesh (HP). The project was overly ambitious given its time frame, the climate of the hill areas, and the limited experience and capacity of the implementing Government of Himachal Pradesh (GOHP) departments; in fact, implementation of some components only effectively began in 1990. Nevertheless, the project produced an integrated program of irrigation system development, institutional development, extension, and training which provides a basis for transforming HP into a state with an irrigated agricultural economy. Physical accomplishments were particularly impressive; 878 minor irrigation schemes (MISs) were constructed or improved, and the area under irrigation was expanded by over 26,000 ha--a remarkable achievement considering only 60,000 ha had been irrigated between 1948 and 1985. a shift from monocropping to mixed cropping of high-value crops was observed in project areas. in addition, the project prompted the GOHP and local communities to test cost-saving technologies such as sprinkler and trickle irrigation. Significant progress was also made in afforestation and soil stabilization, which were carried out on 269 schemes. Farmers report that soil conservation works have helped in maintaining a regular water supply and reducing silt flow into storage structures. The environmental impacts of afforestation will not be evident for some time, but it is reasonable to predict reduced sedimentation, a more regular water supply, and protection of scheme components; in addition, the plantation system provides a source of fodder, fuel wood, and small timber. Institution building, especially of the GOHP's capacity to manage activities in the irrigation sector, was more problematic; however, efforts were relatively successful given the magnitude of the challenge and the prospects for sustainability are good. The project successfully increased farmer participation through the development of farmer's organizations; 287 micro-irrigation schemes have been handed over to farmers for day to day maintenance, and the GOHP has agreed, at least in principle, to turn over all scheme to farmers, except for lift schemes. The GOHP has also drafted a new water law and overall water policy, which are ready for consideration by the legislature. Finally, the project conducted extensive training: over 1,700 GOHP officers participated in more than 100 in-country irrigation courses, and 25 in U.S. courses; and more than 29,000 farmers were trained in irrigation skills, management techniques, record keeping, etc. Lessons learned included the following. (1) Preoccupation with construction overshadowed and delayed implementation of other vital project components. Projects such as this should incorporate controls on counterparts' inclination to focus on construction. (2) Because development of farmer organizations lagged far behind irrigation scheme construction, there was no alternative but to adopt a post-construction participatory approach to farmer organizations. Farmers should have been involved in planning and decision making at the early stages, as in other USAID irrigation projects. (3) Frequent changes in the position of chief engineer -- 6 over 8 years -- impaired continuity in project planning and monitoring; in addition, the position was not invested with enough authority.