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Over the past 50 years, both financing and socio-economic considerations in South India have shifted heavily towards improving urban infrastructure, causing rural services to be left behind. A recent report released by WHO and UNICEF states that over 884 million people, 84% of whom live in rural areas, use “unimproved water sources” for domestic purposes. This paper considers the case study of Nalgonda, a district to the east of Hyderabad, India. Nalgonda struggles with three main issues concerning domestic water: high fluoride levels in groundwater have caused thousands of cases of dental and skeletal fluorosis; second, over two-thirds of Nalgonda does not meet the WHO-requirement of 40 liters per capita daily of domestic water supply; third, poor management and maintenance have increased the risk of failure of existing water infrastructure. The state has been pursuing these issues in conjunction with a multi-district irrigation project that taps the regional Nagarjuna Sagar Dam. Centralized water supply, treatment, and distribution services are appropriate for high population density areas; however, geographical expanse and sparse populations lead to onerous access to improved water sources and inhibit the success of a similar centralized framework in rural areas. This is compounded by a lack of ownership at the habitation and socio-cultural levels. Further, the current water network and its problems - including inconsistent service, corruption, and general distrust of the treated Sagar water - have emboldened wealthier citizens to build private, unregulated groundwater defluoridation plants and commercialize small-scale water businesses. Inequitable services and uncertainty of shared water resources have caused a “tragedy of the commons,” leading to growing disparity and a severely receding water table. This research proposes the Louis-Ostrom Comprehensive Capacity Assessment (LOCCA) tool - an integration of the quantitative Capaci- - ty Factors Analysis risk methodology and the qualitative Ostrom's framework for assessing socio-ecological systems (SESs). The new framework is used to provide a sample assessment of the Vaillapally habitation in Narayanpur Mandal, Nalgonda. Preliminary results indicate that the institutional, technical, and socio-cultural capacity factors must progress to meet the policymakers' current projects technical capacity. Alternatively, decentralized systems, such as rainwater harvesting technology, better serve rural areas with low capacity and demand, while increasing collective investment in village-scale systems.