Water management and competition between users in water scarce river basins is a major challenge facing the human race. The inter dependence of users in such basins, necessitates a clear understanding of each user in relation to the location, the water demand, and the duration of water need. The understanding of these factors, together, is very important for the management of water resources in such basins without which, it is argued that, water is overused and wasted. As an example of this, the large modern and improved rice irrigation systems in Tanzania are believed to use water more efficient than the traditional irrigation systems. Yet, well-founded scientific analyses are a necessary part to quantify such beliefs as they can inform us whether the natural resource, in such systems, is properly utilized and managed or not. Likewise, such studies can allow us to quantify how much water is over used and thus the natural resource is unnecessarily degraded. This paper explores a study conducted in the Usangu basin, Tanzania, to investigate the gross and net needs for modern and traditional rice irrigation schemes, and the implications with regards to water resource management and damage. Problems relating to modernization of traditional smallholder irrigation systems and upstream - downstream water users are further discussed. The paper concludes from the study that modern irrigation schemes are inefficient compared to traditional irrigation schemes. Also modernization of traditional schemes in the study area have resulted into over abstraction and reduced productivity of water. Looking to the future, this study tells us that improvement or modernization of irrigation infrastructure should be balanced between negative impacts to available water resources albeit it's significant economic contribution to the community.