legislative measures, namely administrative allocation, user-managed alloc ation, market-oriented allocation, and water tax.

4.5.1 Administrative water allocation (Rosegrant and Meinzen-Dick, 1996).

This alternative is more appropriate for large-scale irrigation systems th at require large capital, and need to exert state rights over all uses, be it agricultural, industrial or domestic, wildlife or navigation. Unfortu- nately, many government-operated irrigation systems are performing poorly, excessive losses, damage to fishes and wildlife habitat. The main reason is the failure of public allocation to create incentives for us-ers and ma nagers to save water because of the fees for water use are un-der strong p olitical pressure to keep it low. The resulting subsidies mainly favor the rich urban water users and the irrigated farmers but not the poor in slum s or the rain-dependent farmers.

If the price of water use exceeds the mar ginal cost of conservation, users will reduce consumption, save water and hence reduce pollution. It was proven furthermore that if the irrigation s ystem is financially autonomous, instead of centrally financed by the gove rnment, the per-formance management is even better: adequate and timely ir rigation service because the agency's budget depends on service fees colle cted from farmers. Financially autonomous agencies will also be able to su pplement irrigation fees with secondary income from interest on de-posits, sale of water for non-agricultural purposes, and rental of assets owned b y the agency. For example, irrigation districts in Western Hu-nan Province , China, have turned to hydropower generation, fish produc-tion, orchards around the reservoirs, and domestic and irrigation water fees, under the s logan "Use water to sustain water" (Svendsen and Changming, 1990).

4.5.2 User-based allocation system

Small-scale irrigation systems or base units of a large irrigation scheme may be entrusted to a group of farmers, cooperative, irrigation squad of a cooperative. Studies of such fanner-managed irrigation systems have shown a wide diversity of rules for within-system allocation; by timed rotation , water depth, Iand area, or share of the flow (Yoder, 1994). In many coun tries, due to inefficiencies in agency-managed systems, the government tra nsferred management responsibility on both irrigation and domestic water s upply systems from agencies to user groups. An important prerequisite for this management system is the formation of the appropriate group of users.