The objective of this paper is to develop guidelines for improving cost recovery and reducing water use per unit of output. The guidelines were developed from a review of studies of irrigation reforms and interviews with World Bank staff members who have responsibility for irrigation sector reforms. From these studies and interviews, we distilled specific reforms that were important in improving cost recovery or reducing water use, or both. The paper lists the reforms that have raised collection rates and provides examples of what different countries have done to recover project costs and collect water charges. It also suggests alternatives for designing water charges that will give farmers an incentive to make better use of their water. The final section provides a summary of the reforms that are important for increasing costs recovery and encouraging farmers to improve their use of water.