Lima is gradually upgrading its urban water cycle to comply with improved sanitation standards, with the aim of treating the entire flow of water and wastewater that it creates. However, this paper examines the basic characteristics of the main treatment systems that are currently in operation in the Peruvian capital, highlighting the myopic and inefficient nature of these investments. It digs deep in the debate between centralized and decentralized water management systems in a city that is exposed to numerous hydro-meteorological and geological hazards. Previous errors that have occurred in the developed world throughout the evolution process of the urban water cycle should be taken into consideration prior to any infrastructure development in emerging countries. For the particular case of Lima, special emphasis should be given to the resilience of its urban water system in order to guarantee rapid recovery after disaster events.