[2][3] Costa Rica has made meaningful progress in expansion of water services in urban areas over the past decades.

Approximately 99% of the urban population is connected to water supply (as compared to an average of 90% in the LAC region), a significant increase from 92% in 1990.

[6][7] A survey of rural residents in the watersheds of the Baru and Guabo Rivers conducted in 2005 showed that illnesses from poor-quality piped water were common and that the community-based organizations in charge of operating the systems lacked adequate support as well as appropriate expertise.

[8] Furthermore, the vast majority of indigenous peoples living in the 24 reserves in the country do not have access to safe drinking water or sanitation services.

[5] As of 2011, bidding was underway for a large wastewater treatment plant for the metropolitan area of San José with Japanese financing.

Furthermore, the sludge (septage) removed while cleaning septic tanks is usually disposed of in rivers and constitutes a source of pollution.

AyA de facto has an important indirect policy and regulatory role since it monitors the compliance with technical norms, can take over failing systems and advises the Ministry in the development of the sector.

The tariff is set based on short term cash flow needs rather than on real economic costs of service provision.

AyA requests tariff increases when its financial situation is precarious and not a result of long-term investment planning.

Since the government does not directly subsidize the rural sector it is not aware of the magnitude of the problem and of its financial impact on AyA.

According to the Controlaría General de la República, US$203 million were invested in water supply and sanitation from 1990 to 2006, which is on average US$3.3 per capita and year.

AyA estimated in 2002 [13] that, taking into account increased cash generation and efficiency improvements, only about 40% of the investment would still have to be financed by the government.

The major donors involved in the water and sanitation sector are Japanese JICA, German KfW, and CABEI, the Central American Bank for Economic Integration.

AyA is aiming to increase rural coverage to 98% in the next three or four years with the agreement between the Banco Popular and the Central American Bank for Economic Integration (CABEI) signed in March 2007.