A spatial hydroeconomic model was developed to analyze the competition between small private (SPIS) and large public (LPIS) irrigation systems for water control in tropical watersheds and applied to several water allocation policies in Kou watershed in Burkina Faso. Capital (cash and motorpumps) is the main constraining factor for SPIS expansion, and capital inflow accelerates SPIS development and reduces water flows for downstream LPIS users. As SPIS is more cost-effective and less water thirsty, LPIS needs to shift to less waterdemanding and high-value crops or adopt more water-saving practices. Otherwise, only a sharp rice yield increase in LPIS can justify a reserved water quota for downstream users.