The international water sector is facing a significant number of challenges, mostnotably the need to manage an aging infrastructure base with diminishing resources. As an example, water utilities, authorities, and municipalities have significantly under-invested in their underground assets over the last 20 years. Buried infrastructure renewal rates of 0.5% per year are commonplace in the developed markets, equating to a long-term average age of buried infrastructure of some200 years. This should be viewed against the average 50 to 70 year lifespan of most pipe materials. It is against this background of under-investment that the rise of water sector deregulation has taken place. This paper presents an analysis of the effects of deregulation on the water industry in the United Kingdom. The paper also discusses the role of organizational design and strategic planning in helping water utilities adapt to the changing environment. Finally, emerging business models within the British water industry are presented. Includes 8 references, figures.