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In this paper the value of an improved domestic water supply was investigated for economic development and gender relations in rural households in a drought-prone area. A comparative study executed with participatory rural appraisal (PRA) methods with groups of women from 11 micro-enterprises in ten villages and five control villages showed that,when an improved domestic water supply does not function, the entrepreneurs groups have a statistically higher loss of the economic use of water and time than the control groups. The extra income that women gain when the supply works and is used economically helps poor families to bridge the dry season. It could further be quantitatively proven that male female gender relations were significantly better in the entrepreneurs group. This was not so for mother-daughter relationships, which gave new insights into the need to address gender equality issues with the women themselves and with SEWA, the supporting agency. These findings support the view that rural poverty and the status of women would receive a significant boost if policy makers focused on providing employment opportunities for women along with improved water supplies. [ABSTRACT FROM AUTHOR]