More than 80% of Uzbekistan’s agriculture is irrigated and low water quality as well as insufficient water quantity is the main challenges for its development. Transition to a market economy requires reforms in agriculture and especially in water sector. The principal basis for transition to a market economy is introduction of paid water use. The main source of funding for water management in Uzbekistan is the state budget. Allocations from state funds in recent years have grown substantially. Considerable part in the total amount of funding for operational needs accounts for electricity, the cost of which is growing much faster than the increase in appropriations in water sector in general. Fundamental aspects of economic management system should be a mechanism for financing water management organizations, both at the expense of the state budget and at the expense of water users through setting water fees. Payment for water will be a major pre-requisite to save water resources. In Uzbekistan transition to paid water use will allow the more economical use of water resources, and will help to resolve many political, social, economic and environmental problems. Moreover it will solve technical problems which will improve the soil conditions.