This first semester of the second year of the Negowat project has been devoted to the following activities -A- Reorganization of the team and adaptation of work in Bolivia) : 1) Reorganization of the local team in Bolivia 2) Redefinition of the intervention mode in Bolivia. A new controversial water service project, which is to be implemented in Tiquipaya, has polarized water issues in such a way that any discussion on superficial water management is impossible. This, and the team reorganization, led to revise the intervention mode. A new strategy has been proposed that focuses on urbanization and access to urban water services. 3) Elaboration in both countries on the strategies of intervention and interaction with stakeholders. 4) Reorganization of the modeling team in Brazil in order to compensate for the difficulty to identify a pos-doc scientist to implement the work 5) Finalization of the thematic field studies both in Bolivia and Brazil, and elaboration of the first related publication. -B- Consequences on project development: The difficulties met to build an integrated, multidisciplinary and multi-institutional team in Brazil and in Bolivia have led to delays in the development of field work, that were already stated in the annual report 2003. In Brazil, it should be noted however that these initial difficulties have globally been overcome during this semester, and work is now proceeding satisfactorily. However, two thematic areas (access to water and sanitation in urban settlements and representation of water quality processes at catchment level) have started their activities only a couple of months ago. Consequently, the first results, as well as the complete conceptual framework of peri-urban catchment functioning, are not expected to be available before December 2004, instead of July 2004 for the other thematic fields. The political situation of Bolivia in 2003, the conflictive local situation and the CERES difficulties have led to more serious delays in