This paper provides backgroundinformation for development practitioners in the water andother infrastructure sectors. It outlines the majorchallenges related to financing the gap in global waterinfrastructure, including those systems that provide urbanand rural water supply, and sanitation and irrigationservices. Water infrastructure finance includes costs forcapital works as well as the operations and maintenancecosts that motivate sustainable service delivery. Sectionone introduces the linkages between water infrastructure andgrowing global challenges, including food and energysecurity as well as climate change. Section two describesinvestment needs in the sector and details varioustraditional funding sources. Section three proposes a fivestep reform cycle for making better use of limited fundingin the sector. Tools for making these improvements areoutlined in section four. The paper concludes with sectionfive, a summary of the challenges and recommendations forthe way forward.