The rapid and haphazard urbanization in Kathmandu and expansion of built- up area in the peripheral rural landscapes has resulted in formation of the peri- urban areas which are now themselves transforming into urban forms, and simultaneously, water diverted or transferred from these areas is rapidly increasing.
This paper describes the changing modes of urban oriented water flow from the peri-urban landscape of Kathmandu and the implications of this water transfer on water security of peri-urban areas. Through series of semi-structured interviews, formal and informal discussions with local people and key informant interviews, the study found that Matatirtha, a peri-urban area, has traditionally been a source of water for the domestic water demand in Kathmandu. However, the social and economic developments have induced a paradigm shift in urban water transfer from the area and promoted the economic benefits as a way of compensating the loss of local water resources. Moreover, the increasing opportunities of economic benefits through water market in absence of a regulatory mechanism has facilitated exploitation of resources and therefore created a need for a strong mechanism, promoting insights for sustainable water resource management to prepare a water secure area.