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This paper analyses the implementation and impacts of the new water rights and fees system in the Upper Ruaha (Tanzania), which encompasses farmer-managed irrigation through river abstractions, are analysed. The reasons why the Tanzanian government, as advised by the World Bank, suddenly abandoned its agenda of water development in the early 1990s are discussed. The three components of the water rights system (registration, cost recovery and water allocation) are described. This paper also discusses how the new water rights and fees system completely failed as a water allocation tool and aggravated upstream-downstream conflicts in the dry period. The paper concludes by identifying the adjustments required in the current water law in order to reach logistically realistic registration, cost recovery that generates net benefits for government, and government intervention in the water allocation issue that effectively support conflict mitigation during the dry season.

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