In 1984 A.I.D. developed the Central American Initiative (CAI), a plan to ensure a 25% increase in water and sanitation (W&S) coverage in six Central American countries (Belize, Honduras, El Salvador, Guatemala, Panama, and Costa Rica) by 1989. Based on information gathered from A.I.D. offices, other donors, and private voluntary organizations throughout the region, this study assesses the past, present, and projected W&S investment levels of the countries involved, and determines whether CAI objectives can be met and how much additional funding will be required. In general, the results were not good: due to population growth and underfunding of the W&S sector, most of the countries will be unable to meet CAI objectives by the proposed extension to 1992, let alone 1989. In Honduras, in fact, the urban population has grown so quickly that, even if CAI targets are met, the percentage of urban dwellers with water supply coverage will have decreased since 1984. All told, the six countries will need an additional $239 million to meet CAI standards of coverage (plus additional funds needed to improve indigenous capacities to initiate and sustain W&S projects). Detailed profiles of each country are given as appendices, including baseline data on Nicaragua. Also includes 11 tables, four figures, and references.