In the case of large-scale gravity-flow irrigation systems, it is the state which bears the cost of capturing the water supply in remote watersheds and constructing the engineering works to store and deliver water. However, the returns from this enormous investment are ultimately determined by the local organizations responsible for delivering water to individual irrigators. The role of these middle-level groups in mediating between local people and state bureaucracies is vital, albeit frequently overlooked in development project planning. Part I of this report analyzes the organizational breakdown between main system bureaucracies and farmers and formulates strategies for improved design of local irrigation organizations. Chapter I provides historical and global background information, while Chapter II identifies major challenges facing local irrigation organizations, including the need to reconcile public supply with farmer demand and to integrate the knowledge of main system managers with that of local farmers. Chapter III presents essential design choices to be made in organizing at the middle-level and Chapter IV contains guidelines for establishing farmer groups. Part II of the report explores specific cases: (1) irrigation organization in the Punjab, Pakistan; (2) a small reservoir system in Madhya Pradesh, India; and (3) two reservoir systems in Sri Lanka. Implications and conclusions are contained in Part III.