Evaluates project to help the Government of Malawi expand its rural piped water system and provide health education. Special mid-term evaluation covers the period 8/80-8/83 and is based on document review, site visits, and interviews with Ministry of Health (MOH), Departments of Lands, Valuation and Water (DLVW), and USAID/M personnel and with beneficiaries. This project - well-conceived, competently managed, adequately supported by the GOM, and either on or ahead of schedule in virtually every aspect - has succeeded in making Malawi's already successful rural water program even better. Project success is due to three key factors. (1) The community has been involved on a scale unequalled elsewhere in Africa. All activities (planning, resource mobilization, construction, maintenance, etc.) are firmly based on full participation by users. Routine maintenance, for example, is provided solely on a self-help basis and hundreds of km of pipelines have been completely by community volunteers. (2) DLVW and MOH field staff are sensitive to the needs of and possess the skills to work with communities. (3) Senior staff have been far-seeing and dedicated and political leadership supportive. A decision to reduce the number of water schemes from 23 to 16 has actually strengthened the project, more than doubling the projected target population. Despite severe staff shortages, the project's technical aspects are appropriate, and inputs have been timely and well-coordinated. A few correctable problems have occurred in billing, costs and expenditures being otherwise reasonable. DLVW and MOH staff training, which focus on community needs, have been continued and reinforced by the project. Efforts to develop Malawian engineers capable of taking over the project have shown some success. Although the planned DLVW Training and Research Unit has not been established, several useful, albeit uncoordinated, studies (e.g., technical design, and water and sanitation behavior) have been conducted. The Health Education and Sanitation Promotion (HESP) program, which is new to Malawi, has made a good beginning, although better MOH-DLVW coordination is needed. HESP has developed health-related strategies for the water program, trained staff, and begun field tests of laundry slabs and latrines.