In this paper it is primarily sought to ascertain if there is any economic rent involved in the application of canal irrigation in Pakistan. In principle if the competitive price for the public irrigation water supply in the farm sector exceeds the legal water rates charged, the surface supplies are considered to yield economic rent to the beneficiaries . The competitive price for canal deliveries cannot be determined directly because they are not sold in the market but are allocated through an elaborate system of water distribution. However, it may indirectly be derived from the price of tubewell water which constitutes another significant domestic source of” irrigation. If the ability of the beneficiaries to pay for cost of irrigation supply has a precedence, which is more often the case, over the recoupement of its expenses in entirety, the incremental value of additional water to farm output should serve as a guide in determining the price of canal water.