It is often argued that investments in water supply and sanitation (WSS) generate wide-ranging economic benefits. At the household level, improved access to WSS is expected to lead to significant improvements, not only in human health and welfare but also in levels of production and productivity. Because of these wide-ranging effects, investments in WSS are considered important instruments for poverty reduction but, while the expected benefits from investments in WSS are considerable, empirical evidence to support this remains quite limited. This study presents micro evidence, from a survey of 1500 households in Eastern Hararghe (Ethiopia), which enables a better understanding of the impacts of improved WSS access on health, timesaving and productive employment and poverty. Conclusions are drawn and policy implications discussed.