Water scarcity is a major global challenge that often translates to poor water supply for domestic purposes. However, domestic water insecurity can even exist when water is naturally abundant. Despite the abundant availability of surface water in countries such as Colombia, access to water for rural and peri-urban communities remains limited. The water supply systems that exist are prone to poor maintenance and lack of water use regulations, often leading to water either being lost due to leakages or to unintended non-domestic uses. Based on an extensive survey of ~1000 households in four rural and four peri-urban communities in the Valle del Cauca Province, Colombia, in this paper factors underlying inefficient water supply and use were identified. Perceived water use at household level, based on self-reported time spent on various use types such as bathing, and water supplied at system level were estimated. Household size, education level, age and occupation were found to be critical factors that influence end water use and water supply. These not only account for why water is supplied and used inefficiently in rural systems (e.g., due to non-domestic use), it also accounts for variability of perceived water use within the peri-urban systems. Meanwhile, the water use as perceived by households in the rural systems, which was significantly lower than the peri-urban systems, was statistically similar across the rural systems studied. Most of the rural systems had very low ratios of perceived water use to water supplied, indicating that either water is lost in conveyance or that water is used for non-domestic purposes. The peri-urban users, who perceived to use more water than the users in rural areas, were associated with younger and more educated households. Being more educated was also associated with better financial capacity and technical ability to manage the water systems and, therefore, peri-urban systems were found to be better managed.