This paper has three elements. The first identifies the pre-eminence of a health-based view within the water and sanitation sector. This view emphasises the health impacts of improving access to supplies of clean drinking water and better sanitation. It then assesses the relevance of this view to wider debates on how to achieve supply sustainability by adopting demand-responsive approaches (DRA) and by shifting the emphasis to the principle of ‘consumer pays’. The paper argues that an overemphasis on health impacts does not fit well with DRA, which is being increasingly advocated by agencies at an international level. Thus, in order to encourage demand for water services in particular, and to ensure that communities can be engaged in self-financing their development, greater attention has to be paid to the role of water within wider household livelihood strategies – and livelihood impacts should become a major focus of interventions.