Recent discussions in the drinking water industry have led people to believe that water suppliers are struggling to meet their financial demands, especially with respect to regulatory compliance. This thesis examines whether regulatory changes that occurred in the drinking water industry in Nova Scotia have had negative repercussions on the financial capacity of water suppliers. This research provides a precise definition of financial capacity and develops a financial capacity assessment model to answer two underlying questions of the thesis. These questions are: (1) are water systems lacking the financial capacity to maintain and operate their drinking water facilities and (2) has financial capacity been negatively affected by changes in government water regulations and standards that occurred in 1995? This analysis shows there are inadequacies in the financial attributes that comprise financial capacity for each water utility. It also shows that each utility has encountered negative effects in its financial attributes conforming to the timing of the regulatory changes.