Drawing on a study of two irrigation systems in Hebei Province, this paper documents the impacts of rural economic and organization reforms on irrigation system performance. In the two systems, prior to development of irrigation, farmers consumed all their grain within the household. However, at present both districts are selling grain, with annual output of 11.9 tons/hectare in Bayi and 8.5 tons/hectare in Nanyao. However, due to the use of groundwater in Bayi, output per unit of water is 1.5 kg/m3 in Bayi and 1.3 kg/m3 in Nanyao. In Bayi, farmers have augmented declining surface water supplies with groundwater and purchased water – using funds from sideline enterprises – and have increased output. In contrast, in Nanyao both income and grain output increases have reached a plateau. Nanyao, with its weak resource base, will probably need to develop additional income sources to be able to improve water management in order to reach the next plateau of productivity.