M.A. / The adoption of cost-recovery policies by local government in South Africa is an effort to recover costs from the investments made in infrastructure expansion and to ensure efficient delivery of services. This study came about from the need to understand the paradox of continued adoption of cost-recovery policies in a country that faces high poverty and unemployment rates. The focus of this study is to find out what are the social impacts of the water cost-recovery policy on the livelihood of female-headed households. The first chapter is the background to the study. The main concepts of cost-recovery, female-headed households and livelihoods are defined. In addition, the demographic, social and economic description of Ward 77 in City of Johannesburg Metropolitan Municipality which is the focus of this study is provided. The second chapter is a review of literature behind the rationale of cost-recovery and its implication in South Africa. In addition, the livelihoods framework is explored. The third chapter addresses the methodological approach used to undertake this study. Qualitative methods were used, in the form of in-depth interviews with stakeholders, documentary reviews as well as a focus group and interviews with female-headed households. The fourth chapter is the discussion of findings arising from the consolidation of data. We find out about the livelihoods of the households before and after the implementation of cost-recovery and the effects this has had on the household. The final chapter is an analysis of these findings along the themes of the study namely the social impact of water cost-recovery on the wellbeing of the household, the impact on household financial security, the impact on social networks and the impact on educational spending. The study concludes by pointing out that, although there has been advancement in infrastructure development and service provided, the poor in urban townships continue to be negatively impacted by cost-recovery policies. Policy makers should consult communities in formulating approaches that tackle the issues of rights and affordability of basic services such as water. With the country’s high poverty and unemployment levels, cost-recovery would only be effective if the incomes of households are increased. Thus policy makers must take into account the socio-economic situation of a population to ensure the inclusion of all in the formulation of policies.