In recent years China has attempted to reform water management by decentralizing water management responsibilities. The overall goal of our paper is to better understand the emergence of water user associations (WUAs) in China and assess if they are adhering to the practices spelled out by the Five Principles, a set of recommended practices that are supposed to lead to successful WUA operation. Using four sets of different types of villages to examine implementation and performance, we find that World Bank-supported WUA villages ("Bank villages") can be thought of as operating mostly according to the Five Principles. For example, the Bank villages were endowed with a more reliable water supply; were set up and were operating with a relatively high degree of farmer participation; and leaders were more consultative and the process more formal. When WUAs are run according to the Five Principals, we show that WUAs increase water use efficiency. The study also provides evidence that there is a perception in the Bank villages that water management is improving in general and that there is less conflict both within the village and among villages. Perhaps more importantly, we find that the Bank's effort to promote WUAs extended beyond their own project villages. The openness, consultative nature, and transparency found in the Bank WUAs are also found (albeit at a somewhat lower level) in the non-Bank WUA villages.