Sipalay City is provided with three levels of water service. Level 1 and 2 systems  are mostly derived from shallow and deep wells, supplemented by a few natural springs.  The urban barangays are served by a Level 3 system managed by the Local Water  District. Barangays Gil Montilla and Nauhang are serviced by the Gil Montilla  Waterworks  System (under ARSP) and a similar system is found in Manlucahoc. MMC  has also  established a water system servicing San Jose (mine site). Current estimates  indicate that  about 20 percent of the total population has access to potable drinking  water.

         Access to drinking water is rather difficult for many because of the absence of piped  water systems and the fluctuating supply particularly during the summer months in some  barangays. There are also concerns about the potability and safety of water sources as the  possibility of contamination may not be farfetched. It should be noted that given the highly  mineralized nature of Sipalay's landscape, the mining operation and associated mine  tailings as well as regular occurrence of flooding in low lying areas predispose the ground  and xspring water sources not only to bacteriological but also heavy metals contamination,  which  would have mild to serious implications on the health of the populace. Only the  Sipalay water district regularly checks the quality of its water supply. Despite this, there  are concerns about potability probably because of the water's odor. It was estimated that  only about 20 percent (Barangay Development Plan) of the total population has access to  potable drinking water.