This report summarizes the current context of the water and rural sanitation sub-sector and the analysis thereof undertaken at the Cusco+10 seminar. The first part of the report, basic rural services at the end of the 20th century, summarizes the situation as it stood in the 1990s and the conclusions reached at the 1999 seminar workshop. The second part, Trends in the first decade of the 21st century, identifies some of the new variables that have emerged and are shaping the context as work continues toward establishing sustainable services. The third part, challenges for the next decade, reports the findings from the Cusco plus 10 analyses and sums them up in five major challenges to be addressed. Finally, the fourth part, conclusions, looks to the future and suggests some new trends that are affecting the five major cross-cutting themes.