This research is conducted to develop an irrigation fee policy for the Upper Pampanga River Project in the Philippines. Project costs and benefits have been determined and benefit-cost ratios computed for the different phases of the project and for different combinations of phases. The different phases of the project include the Upper Pampanga River Project, the power phase, the Aurora-Perfaranda Irrigation Project, and the Tarlac Irrigation Systems Improvement Project. The internal rate of return has also been computed in some instances. In this analysis, the irrigation benefit has been evaluated based on the world market price of rice and expressed in terms of "freeon- board" (FOB) and "cost, insurance, and freight" (CIF). The power benefit, on the other hand, has been based on the cost of an alternative thermal plant. Costs are then allocated to various purposes of the project using the separable cost-remaining benefits method. Using the allocated costs, benefit-cost ratios are again determined for irrigation and power purposes. Allocated irrigation benefits have been expressed on a per hectare basis. The values obtained are used as bases for irrigation fee assessment. Another basis for irrigation fee assessment--the capability of the farmers to pay--turned out to be negative under 1975 circumstances. The farmer's capability to pay was based on a survey of more than 100 farmers for the two crop seasons in 1975. However, at full project development when the potential benefit has been realized, farmer-users should be able to pay all the irrigation costs. While the irrigation fee has just been increased to 300 kg of paddy/hectare/year, which at present is equivalent to 14330/hectare/year, the research indicates that the National Irrigation Administration should retain this assessment for about five years for the following reasons. 1. Additional irrigation fees should not be assessed the farmers since percentage of collection dropped as a result of the recent increase in charges. Further, on the basis of the farm budget analysis for 1975, the living expenses of a farm family are greater than the net farm income. 2. Increasing the irrigation fee at this stage is not compatible with the government program of self-sufficiency in food production. 3. Decreasing the irrigation fee is not a sound policy either, since at the present rate there is already a heavy government subsidy. If warranted, further subsidies and incentives could be better accomplished through agricultural reforms, agricultural extension programs, medical and health care, and other government programs. 4. Repayment of the foreign loan is approximately covered by the present irrigation fee charges if all the farmers pay their irrigation fees. The present percentage of collection rate leaves much to be desired. On this basis, several irrigation fee collection alternatives have been investigated. The alternatives that hold promise include the involvement of the Irrigators' Groups, the credit agencies, and the municipal treasury offices.