This research is aimed to present the alternative model for water management, which is based on local wisdom and operated by community participation in Saiburi watershed area. The Gayohmati community’s dam in Bacho District, Narathiwat Province, was selected to be a case study. Data collection involved a survey, questionnaires, interviews and group discussion. The findings showed that the Gayohmati community has utilized a community-led water management method for over 50 years. Through the integration of local wisdom and knowledge in water management, investment system, construction, allocation, and maintenance, the Gayohmati community has effectively operated the dam for their benefits without any conflict. On the other hand, a comparative case study with the government’s digging project of the Bacho Canal to solve the flood problem in downtown Bacho revealed that the project has caused severe economic, social and environmental damages to the community, especially to the farmers (77.8%) who need the water from the canal for their rice plantation. This is due to the lack of the study of the project drawbacks and of the survey of public opinions about the project. According to the study of 300 household samples, 92% expressed the need to take part in water management, and more than half of the samples (52.7%) were concerned for the future water utilization which, they believed, will lead to the community conflict. In this case, they suggested that the government should take action in supporting community involvement in water management.