The main purpose of this thesis was to check the farmer’s willingness to pay for increase in water charges and to find out the main reasons behind low abiyana recovery. The Contingent Valuation method (CVM) was used in this study and proportionate sampling was used to interview the farmers in district Mianwali. A sample of 264 farmers was selected out of which 84 belongs to tehsil Mianwali and 180 belongs to tehsil Piplan. Single bound dichotomous choice (SBDC) method was used in this research and farmers were assigned pre defined bids on the basis of their size of farmland. Bid 1 was assigned to farmers with a canal irrigated land up to 5 acre, Bid 2 was assigned to farmers with a canal irrigated land up to 10 acres and Bid 3 was assigned to farmers with a canal irrigated land more than 10 acres. Binary Logistic regression model was used to estimate the impact of various variables that affect the farmer’s willingness to pay for canal water. The result of the regression shows that education of farmers, ownership of farmland, size of farmland irrigated by canal water, monthly income and types of crop positively affect farmer’s willingness to pay while tube well on farm is negatively related to farmers willingness to pay. It has been also found that there exist a negative relationship between bid level and willingness to pay of farmers. The findings of qualitative data revealed that some of the main reasons behind low abiyana recovery are less incentive for abiyana collectors, lack of fast punishment mechanism for defaulters and late issuance of farmers list to abiyana collectors. Based on the empirical findings, the study strongly advocate to increase the percentage/incentive for abiyana collectors, to improve abiyana recovery and there is also need to increase the abiyana charges to make canal irrigation system sustainable and to reduce financial burden on Punjab provincial government. Supervisor:- Dr. Anwar Hussain