The step-by-step refinement of our urban water systems has yielded unsustainable, centralized urban water services in many developed regions of the world. These large systems also provide the wrong role model and promote conservative thinking for the rapidly developing regions of the world. Population growth, particularly in the water scarce regions on every continent, makes current water-based sanitation unsustainable for most of us. Also, the provision of sanitation and drinking water consumes considerable energy, whereas the biodegradable organic matter within wastewater contains over ninetimes as much energy as typically used to treat wastewater in developed regions. Energy savings could be further extended, along with intensive animal production 'wastes', by conserving the imbedded energy in wastewater-nitrogen through agricultural reuse, along with recovery of our finite fossil phosphate (known general availability 60-150 years). Household water conservation could easily reduce demand by 70% compared to today's US-use, through local water reuse and other innovations available that dramatically reduce water used to flush toilets, wash cloths and irrigate gardens. The new paradigm in urban water management needs to be based on the principle of source-separation of 'waste' streams, which provides for an array of options for nutrient and energy recovery, as well as the local supply of water fit-for-purpose. Such changes are not just reliant on new technology; indeed, major hurdles to change result from the current dispersed governance of water services and lack of full-scale demonstration of novel systems. A framework developed and used in Sweden and Australia to aid the realignment of urban water services is presented, along with what research questions arise from this new water paradigm.