The Nepalese government finds it increasingly difficult to sustain its irrigation systems, primarily because of the absence of or negligible cost recovery from the systems. In this paper, farmers' ability to pay for irrigation services is examined based on information from a field study. Both a comparative analysis and the marginal value product (MVP) approach reveal that farmers under both government- and self-run irrigation systems are in a position to pay the operation and maintenance (O&M) cost. However, charging capital as well as O&M costs is found to be difficult to justify.