The Dominican Republic has achieved impressive increases in access to water supply and sanitation over the past two decades.

However, the quality of water supply and sanitation services remains poor, despite the country's high economic growth during the 1990s.

For example, in nine provinces located in the Central, Northeastern and Eastern part of the country less than 70% of the population had access to an improved source of water supply according to the 2002 census.

Watershed degradation occurs mainly in the lower sections of most coastal basins and is a result of unplanned settlements and activities and lack of sanitation services.

Since 1962, the institutional framework has remained relatively stable, with a gradual process of regionalization to the provinces with the largest cities of the country.

In the period since 1980, which was characterized by economic growth fueled primarily by a massive inflow of tourists, substantial investments were made and service coverage increased significantly.

The government of President Joaquín Balaguer thus created INAPA through Law 5994 on July 30, 1962, again administering all water systems centrally.

In 1973, under the second Presidency of Joaquín Balaguer (1966–1978), CAASD was set up in the capital Santo Domingo as the first regional water and sewer company.

At the same time, INAPA embarked on its own decentralization programme, handing over the operation of rural water supply systems to community-based organizations.

In 1999 the Inter-American Development Bank (IDB) approved an important US$ 71 million loan to consolidate the reform and modernization of the water and sanitation sector.

Specifically, it aimed at transforming the five regional water companies outside the capital into commercially operated entities with no political interference in day-to-day management and strong representation of municipalities and civil society in their Boards.

Under the Presidency of Hipólito Mejía (2000–04), the water and sanitation law was debated in Congress in 2002 and again in June 2004, but was ultimately not passed.

According to a 2006 evaluation for USAID, the Dominican Republic is one of the few countries in Latin America where sanitation is managed by a Public Health State Secretariat that is not coordinated with the rural potable water programs.

Their general directors are appointed by the President of the Republic, thus showing a continuity of centralized decision-making in the presence of regional companies.

In rural areas, INAPA handed over the responsibility for the operation of water systems to community-based water associations (Asociaciones Comunitarias de Acueductos Rurales - ASOCAR) consisting of largely unpaid volunteers in domestic and foreign based nongovernmental organizations (NGOs).

The regional water and sewer companies and INAPA rely largely on subsidies from the central government using mechanisms that are not transparent and do not promote efficiency.

The utility has also signed a performance and financing agreement with the national government, providing more transparency and incentives to improve efficiency.

[24] It has been argued that poor allocation of resources has resulted in lower increases in coverage rates than would be expected, given the levels of investments.

[26] Since 1998 USAID has provided technical assistance to INAPA to introduce what it calls a Total Community Participation approach in rural water supply and sanitation.

From 2002 onwards, USAID and the NGO Family Health International supported INAPA in replicating the approach in other parts of the country.

In April 2009 the World Bank approved a USD 34 million Water and Sanitation in Tourist Areas Project.

Its main objective is the reduction of the high economic, environmental and social costs caused by wastewater and solid waste deficiencies, especially in tourist areas, and the improvement of the coverage and quality of the provision of water as well as the collection and disposal of wastewater and solid waste in the Dominican Republic.