This study, which is based on reports and articles from various parts of the world, discusses the future development of urban water systems in developing countries. The starting point is the growing need for water and water infrastructure in these countries. Based on an analysis of shifting trends in the water sector in developed countries it is argued that the new infrastructure being constructed runs the risk of soon becoming inefficient and outdated. The first trend is the improvements in domestic water use efficiency; the second is the new sustainability agenda, which places new demands on the water systems. Cities in the developing world have the opportunity to promote domestic efficiency at early stages by laying a strong emphasis on demand management, and to construct more sustainable systems by including sustainability criteria early in the development process.