PACR of a grant (3/85-12/92) to CARE to improve health conditions for rural populations in Guatemala through the construction and maintenance of water systems (the project targeted women, the primary caretakers of water systems). The project was successful and encouraging. It met its targets in terms of community organization, water supply construction, provision of latrines, establishment of functional community water committees, and to some extent the improvement of family health status through education. In all, 59 communities received water systems and 32,104 persons were directly served through 5,883 water connections. Each household that received a water connection also had project help in building a pit latrine. The quality of the water systems was found to be very good. All the systems were organized to operate under a local committee, and a manual for these committees was produced. The satisfaction of users was reflected in their willingness to pay the monthly fee; arrears were uncommon. The health education component, which started late, reached 560 women in 10 villages. The methodology of strong community participation in all phases of developing rural water systems and latrines proved successful. Likewise, the community contribution (female volunteers) in the education process was an important tool for improving knowledge and practices concerning sanitation. The type of water system adopted, provision of water in the home, provided a greater opportunity for family health than the lower cost system of public standpipes. In-home water systems have provided women with a sense of ownership which in turn has led to improved maintenance of the systems, and ultimately improved health conditions. Construction of water systems was found to be a key to promoting community acceptance of latrines. The importance of health education in improving community health status was highlighted by the project, especially during the last years when the health education methodology was improved. As CARE was an efficient administrator, it was not necessary to develop an administrative unit within the government which could continue this methodology after the CARE intervention ended. Another bilateral donor provided CARE with funds to develop a similar project in another geographical area of the country. The health education actions were developed mostly by CARE personnel. However, activities ended when the construction phase was completed. The advantages of latrines had to be explained before they were available for use. Appropriate use of water could not be practiced and, therefore, the adoption of these practices could not be observed by the project personnel. These considerations were taken into account when AID authorized a new project with CARE in 1991. The new Rural Water and Health Project builds on the experience and administrative structure of the project and extended for a period of 18 months the support of community volunteers by CARE extensionists in 12 project sites. (Author abstract)