Water is a key input of agriculture. In the past, the area under cultivation was small and there was less stress on farmers to grow more and more of each crop. Water was considered a free good. The situation has changed since. The increase in cropping intensity has led to a rise in the demand for irrigation water. Water is not a free good any more. The provision of irrigation water to the farmer’s fields is going to be costlier. The Government of Pakistan is spending heavily on the operation and maintenance of the irrigation system yet shortage of funds is a major reason for deferred maintenance, which threatens the operational integrity of the irrigation system [World Bank (1988) and Haq (1995)]. The shortfall in O&M funding was estimated to be more than 24 percent in 1993 [World Bank (1994)]. As poor O&M has direct effect on the productivity of agriculture, indirectly it affects the whole economy [Carruthers (1981)]. The allocation of funds for the increasing O&M costs is becoming a problem for the Government of Pakistan with every successive year. One logical answer to this problem is to increase abiana1 fees from the users of irrigation water supplies. The revenue collected through abiana may be used for O&M purposes, but it has been reported that the revenue collection is far less than the expenditures incurred. Resultantly the gap has been increasing every year [Chaudhry (1989)].