This publication analyzes the link between poverty reduction and water management, and outlines the different ways in which improvements to water management can advance the cause of poverty reduction. Indeed, improving access to water is in some cases an essential pre-condition to the attainment of other MDG targets: there is little prospect of many health, environmental or income targets being achieved unless action is taken to address water problems. The paper also gives a clear and optimistic message for the future. It illustrates that improving the contribution of water management to poverty reduction is not just achievable: it is affordable.