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The success of any diagnosis strategy critically depends on the sensors measuring process variables. This paper presents a strategy based on diagnosability maximization for optimally locating sensors in distribution networks. The goal is to characterize and determine the set of sensors that guarantees a maximum degree of diagnosability taking into account a given sensor configuration cardinality constraint. The strategy is based on the structural model of the system under consideration. Structural analysis is a powerful tool for determining diagnosis possibilities and evaluating whether the number and the location of sensors are adequate in order to meet some diagnosis specifications. The proposed approach is successfully applied to leakage detection in a Drinking Water Distribution Network.