The majority of communities in the Northwest Territories lack the water, sewage, and garbage facilities available in southern Canada. Recently, the Government of the Northwest Territories proposed a multimillion dollar ten-year program to upgrade the water and sanitation services of the sixty-odd communities under its jurisdiction. In this paper, which is a first report on an ongoing project to upgrade the sanitary conditions of settlements in the Northwest Territories, we develop a methodology whereby the cost of the alternative water, sewage, and garbage systems for each community can be determined, compared, and evaluated. This analysis defines the level of service to be recommended in each community.Cost data for sanitary installations in the north are generally not available and therefore need to be estimated. The costs associated with alternative systems are assessed as a function of some one hundred variables, including population, demand for water, distance to the water source, topography, terrain, weather conditions, severity of climate, existence of roads, availability and cost of gravel, general remoteness of the community, freight rates, etc.The basis for comparison of the various level of service alternatives is the net present value of the investment required over the duration of the program, including capital as well as operating expenditures. Actual data for some forty-five communities are used in the calculations.