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The present study analyzes the role of informal markets in fulfilling the water requirements of poorer households in Chennai City, India. The results of a survey reveal that a significant number of poor people purchase water from informal markets and that they incur a sizeable expenditure on water purchases; some of these households are also willing to pay additional amounts for improved water supply from public sources. The results suggest that improvements in public water supply would significantly increase the welfare of the poor. The informal markets need to be regulated and monitored so that they can serve the households in a better way.