"On the surface, you don't see a heck of a lot of public outcry about health problems, but they are nevertheless occurring," New Zealand Council for Infrastructure Development chief executive Stephen Selwood said.
Smaller water schemes and smaller communities struggled to get the investment and infrastructure needed to ensure standards were met.
"Why should remote communities be exposed to health risks when most of us aren't?"
Last year, residents of Tokomaru, in Horowhenua, mounted a protest over having to wait a decade for upgrades to their water supply.
A long-standing boil-water notice was lifted in February after the commissioning of a filtration system.
"Smaller communities with a smaller rating base need more assistance from the Ministry of Health to upgrade their drinking water supplies," said Green MP Eugenie Sage, who has campaigned for improvement. "But the protection of water sources, whether groundwater, lakes and rivers, is the critical issue - that's where we are failing, and that leads to increased costs to councils because they are having to do more treatment."
Mr Selwood said his group was working with Local Government New Zealand on a national review of drinking water infrastructure.
Health Ministry director of public health Darren Hunt agreed that per-person water treatment was more expensive in smaller communities.
"This makes it harder for small communities to be able to afford treatment to prevent or protect against protozoa - giardia and cryptosporidium - contamination which is expensive to remove or disinfect."
But he said the ministry's subsidy scheme allocated about $10 million a year to help small, disadvantaged communities upgrade systems to meet standards. When finished, the scheme will have provided about $120 million.
How to prevent contamination
•Check and maintain bores.
•Keep roofs clean and clear of vegetation.
•Install diverters that stop first flow of water from roof entering water storage tank.
