Farm budgets based on survey data are used to calculate the net revenue for average irrigated and unirrigated farms for four tenure classes on the Milagro irrigation project, Ecuador. Differences in net revenues between irrigated and unirrigated farms within each tenure class are assumed to be the return to investment in irrigation capital, assuming homogeneity of all other production factors. The internal rate of return is calculated on investment in irrigation capital assuming returns to such an investment are the difference in net revenues between irrigated and unirrigated farms. Investment in such capital is found to be highly profitable assuming the opportunity cost of capital is 12 percent. However, small size farms (minifundios) are relatively more profitable than larger farms.