Reports on feasibility of a proposed subproject of the On-Farm Water Management project to upgrade the institutional and technical capacities of District Councils in Pakistan to administer canal irrigation associations. A historical review of changing government jurisdictions and local responsibilities and the trend toward promoting increased agricultural production and rural development provide a context for examining the current (post-1979) system. The structure and functions of District Councils (DC) and Union Councils are discussed, as are the Councils' relationships to the Government of Pakistan and various funding mechanisms. DC's are responsible for planning district development programs, including agricultural development and irrigation, and providing assistance in the formation of local associations. Under the proposed pilot sub-project, DC's will establish and provide extension services to water user associations to construct, maintain, and manage local irrigation systems and will develop mechanisms for long-term self-financing of irrigation management activities. Discussed are DC staff training, technical assistance inputs, criteria for pilot site selection, financing modes, the concept of water users associations, and project monitoring.