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Local level institutional arrangements have been promoted by government and development agencies in Ghana as vehicles for sustainable water resource governance and rural development. However, these arrangements often lack the requisite capacities to fulfil their roles and responsibilities in this domain. This paper explores the existing capacities and capacity gaps among such institutional arrangements at regional, district and community level arrangements levels. Four case studies were undertaken of such governance in four communities of three districts in Ghana's Upper East Region involving in-depth and focus group interviews as well as field observations. We found that landholders' livelihoods have suffered as a result of the inadequate capacity within local level institutional arrangements to effectively manage irrigation water resources. The ineffectiveness of local level arrangements for irrigation water resource governance followed from irrigation governance responsibilities being devolved to local community organisations without adequate support for post project capacity building.