Summarizes final evaluation (PD-ABH-884) of a project to support the construction and operation of approximately 5,258 hectares of irrigation systems in Honduras. Evaluation covers the period 1986-10/93. USAID/H's comments on the evaluation are as follows. Given that a baseline survey was not executed during the life of the project, the evaluation team could not fully measure increases in farm income, production, and productivity. However, it was noted that the mere installation of irrigation systems for the cultivation of nontraditional crops highly benefitted participating farmers. Impact at the goal and purpose levels could not be completely measured due to the limited scope of the project's information system. Therefore, the report was limited to the assessment of project performance in terms of its strategies and outputs. In this regard, the project was successful in adding about 12% to the total irrigated land in Honduras. Lessons learned were discussed in the report. Significant shortfalls in project progress occurred during the first three years. This situation was caused by delays in the approval of the project's credit component which had been originally designed to reach small campesino farmers in the subsistence to commercial range. The final credit regulations, authorized three years into the project via the private commercial banks, excluded farmers without loan collateral. The project was never amended to address this situation and the original target group was kept through its implementation. As designed, the project's credit component was not an appropriate mechanism for reaching small campesino farmers. Other implementing options should have been considered if irrigated agriculture was to be targeted to small campesino farmers, especially in view of the principal constraints identified such as the lack of clear land titles and a simple procedure for acquiring water rights. The report also estimates the sustainability of the development accomplishments and contains recommendations for improving the advancement of irrigated agriculture in Honduras. Bankers' experience has shown that irrigation is a profitable activity, and they are now willing to continue to onlend with their own resources if potential clients have good irrigation project designs and feasibility studies, and the required collateral. However, on various occasions farmers have suggested that financial resources under favorable terms are needed from the international donor community to significantly develop irrigated agriculture in Honduras. Transfer of management of the irrigation districts (Comayagua) to the Water Users Associations (WUAS) was finalized in mid March, 1993. The project supported this privatization initiative by providing the WUAS with TA in the areas of district management and irrigation technology. Local currency generated funds (PL-480 Title III) were provided by the GOH as counterpart to the project to finance the construction and rehabilitation of irrigation infrastructure consisting of approximately 4,400 linear meters of concrete lined canals. Operation and maintenance activities are executed by the WUAS with the support of the GOH. Actions still needed in this area include additional training to further the privatization efforts; addressing the issue of lack of water rights and clear land titles; the provision of financial resources for the rehabilitation of the irrigation districts; and the removal of subsidized prices for irrigation water. The team's evaluation methodology was sound and they spent adequate time in the field and in personal interviews to develop their findings and recommendations. Their analyses were well executed and the Mission accepts the findings and recommendations, not withstanding the information constraints. (Author abstract)