PACR of a project (8/86-12/92) to improve the management of irrigation systems in Sri Lanka. The project was implemented by the Ministry of Lands, Irrigation, and Mahaweli Development (MLIMD). The project's central and most successful element was its development of Farmer Organizations (FOs) to participate in irrigation system management; as of the PACD, 11,000 ha of irrigated areas were under joint management. Specifically, the project supported policy reforms which transformed the focus of the MLIMD's Irrigation Department from construction to working with and through FOs, enhanced the legal status and powers of the FOs, and transferred responsibility for operations and maintenance (O&M)/rehabilitation of tertiary irrigation systems (e.g., distributary and field canals) to 40 Distributary Canal Farmer Organizations (DCFOs). By the PACD, a total of 800 km of canals had been maintained or rehabilitated, leading to improved water distribution and management, increased production, and a decrease in illicit irrigation water tapping and the use of slash and burn chena cultivation. Sustained O&M of newly rehabilitated irrigation systems are being ensured through a joint DCFO-Irrigation Department Preventive Maintenance Program After a year of implementation, a low-cost, low-risk crop diversification program was introduced. Growing of mung beans between rice crops proved particularly successful; there was also considerable success with high-value crops such as chilies, onions, and cucumbers. Despite the mid-term evaluation, which felt that the program was beyond the project's scope, the program was continued, and replicated by farmers throughout the project area. The project generated significant economic growth. All DCFOs collect fees from their members and use these resources to generate income through agribusiness activities, undertaking canal rehabilitation contracts, and releasing mortgaged paddy fields of poorer member farmers who have mortgaged the fields and then defaulted on repayment. Additionally, improved irrigation and market access have increased agricultural production and profitability, as well as sustainable employment. In total, the project has increased annual productivity by about $4 million. Overseas training was completed as planned, augmented by a fairly large amount of in-country training in irrigation system O&M, financial management, and computerized systems operations. Seven major studies and a literature review were among the achievements of the research component. Prospects for sustainability are good. FOs have the capability and authority to continue their activities, and the Government of Sri Lanka's commitment to irrigation development is clear and will ensure future funding, though at reduced levels. The project's impact has in fact already extended beyond its PACD: more FOs have been formed, training has continued, and the number of irrigated ha under joint management has almost quintupled. The following lessons were learned. (1) Measuring the impact on productivity of irrigation rehabilitation and management improvement can be difficult and unfeasible. It would require a detailed monitoring plan beginning with baseline data, as well as the analytic ability to distinguish and measure the impacts of many variables (e.g., project interventions, rainfall, pests, fertilizer prices, and civil unrest). In a similar vein, detailed site and system studies on constraints to productivity should precede design and implementation of interventions for improvement. (2) In introducing participatory management to irrigation schemes, institutional developers need to focus on building communication between engineers and farmers. (3) Institutional organizers of FOs should be recruited from the project area and have cultural and economic backgrounds similar to those of the targeted farmers. (4) Farmer representatives should be elected by secret ballot; politicization is a major threat to FOs in Sri Lanka. (5) FOs should be formed on the basis of hydrological rather than community boundaries. (6) An interdisciplinary, participatory management project for irrigation system improvement needs well-planned periodic workshops to assure integrated team planning, consensus, and implementation. (7) Since FOs were given construction contracts, their incentive was often to make a profit rather than to design cost-effective irrigation schemes. Requiring FOs to contribute a substantial portion of the rehabilitation cost for their area would encourage them to make more pragmatic decisions. (8) Trained and motivated technicians are a prerequisite to improved technology for irrigation water management. Problems using fixed amount reimbursement for irrigation rehabilitation and the project's solutions are discussed in an annex.