Over the past decades public investment in major, medium and minor irrigation systems has not yielded the expected results. The solution to the growing water crisis lies in the institutional reform of existing social systems so as to manage the demand for water. In recent times, there has been an emphasis on capacity-building of farmer organizations (FO) in irrigation projects. This study focuses on investigating the institutional capacities of FOs in irrigation systems in the Anuradhapura and Kurunegala districts. Primary data was collected from a stratified random sample of 48 FOs selected from major, medium and minor irrigation systems in the Anuradhapura and Kunurnegala districts during 2008. The Group Dynamics Effectiveness Index (GDEI) of FOs was developed by weighing the significance of important parameters and employed in the calculation of the overall effectiveness of FOs. Most of the FO members in both districts were landowners and there was a powerful dominance from farmers. Generally, the marginal participation in FO activities was about 38 % in both districts. The most common causes for the low participation were the lack of accountability and transparency of the functions of FOs. Farmer organizations (FOs) in major and medium irrigation systems had 51 % and 29 % higher GDEI, respectively, than FOs in minor irrigation systems. The values of ‘Gini Coefficients’ in major, medium and minor irrigation systems were 0.38, 0.43 and 0.48, respectively, thus indicating that FOs play an important role in minimizing inequalities among farmers. There was no significant difference in water productivity (0.19–0.20 $/m3) between major and medium irrigation systems, but the water productivity was low (0.07 $/m3) in minor irrigation systems. Farmer organizations (FOs) with medium size (30–40 members) and economically homogeneous members had better irrigation management. Chi-square results show that while the income equity had no significant effect on the overall GDEI, the participation rate and water productivity that reflects the success of operation and maintenance (O & M) had a significant impact of 5 % and 10 % probability levels to the GDEI of FOs. There is a need to establish strong linkages between the FOs and the Irrigation Department for successful irrigation management. The behavioral change that is required to facilitate the adoption of technology can be effected through institutional changes. It is recommended that FOs need a lot of capacity building in technical and institutional issues to sustain the irrigation systems.
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