The ability of public institutions to provide efficient and equitable potable water services is key to reducing water-borne diseases, one of the leading causes of morbidity and mortality in the developing world. In this article, a case study of potable water and public health programs in Tijuana, Mexico, is used to direct attention to practical examples of policy and institutional incapacities. A qualitative methodology was used to gain access to local context and the formal and informal actions of the key informants. This paper concludes that public health agencies are creating the illusion of program action through disease surveillance, however capacity gaps demonstrate that institutional policy is not pragmatically reflected on the local community level. Political client–patron relationships are used to circumvent bureaucratic barriers and distribute resources at the local level. This raises the question of whether further accountability will bring the much-expected equitable distribution of public goods in the developing world.