The average annual rainfall in Taiwan is approximately 2,500mm, or 90.5 billion cubic meters a year. As this is 2.6 times that of the world average (970mm), Taiwan can be considered a high rainfall region. The climate, latitude and terrain however meant an uneven seasonal distribution of rain. When coupled with steep, fast-flowing rivers, the actual usable water volume amounts to under 15% of the total annual rainfall. High population density means that each person has just 4,250 cubic meters of water at their disposal – just 1/8 of the world average (34,000 cubic meters). Taiwan is therefore a region with limited water resource potential. Taipei County has now achieved quasi-municipality status and is the most populous region in Taiwan with 3.8 million residents. Development is ongoing as well with new urban planning districts such as the New Banciao Special District and the Sinjhuang Sub-Center. This makes the sustainable use of limited resources a very important issue. The objective of this study is to use material balance analysis to understand the actual situation on supply and demand of tap water in Taipei County's 29 cities and counties. This is then examined to establish the relationship between supply, demand and their applications. The results will go towards ensuring the effective, sustainable use of water and provide the relevant agencies (e.g. the Taipei County Government and Taiwan Water) with a useful reference in future policy-making. Statistics indicate that in 2007 Taipei County had a population of 3,798,015. Tap water was supplied to 3,691,998 people so the water supply coverage rate was 97.21%. The water needs of 29 townships and cities in Taipei County are met by ten tap-water systems overseen by Taiwan Water's 1st Branch, 2nd Branch and 12th Branch as well as the Taipei Water Department. The Taipei water supply system and the Bansin water supply system are the most important systems and together account for 87.13% of total system capacity. Another study indicated that in 2007, Taipei County's total water allocation was 759,604,162 cubic meters. Total volume of water sold was 517,282,357 cubic meters so the water supply system had an efficiency of 68.10%. The water supply coverage was linked to the level of urbanization in local districts. The higher the level of urbanization meant a higher rate of water supply coverage. In 2007, the average water allocation per person in Taipei County was 206 cubic meters per year (approximately 564 liters per day) and average volume of water sold per person was 140 cubic meters per year (approximately 384 liters per day). This was higher than the target of 250 liters per day set by the national government. Up to 242,321,804 cubic meters of water were also unaccounted for in Taipei County in 2007, or around 31.90% of the total water allocation. This includes government water use, firefighting water, water meter error, pipeline leakage and other factors (e.g. pipeline cleaning, water theft). The main cause was pipeline leakage with 240 million cubic meters of water lost. To put this into perspective, the total capacity of the Shihmen Reservoir that year was 210 million cubic meters. If each kiloliter of water costs on average 10 NTD, Taipei County alone cost the national treasury 2.4 Billion NTD.