Due to difficulties in developing new water sources compared to increasing demand for water recently in Korea, there has been an enhanced interest regarding leaks. Accordingly, in order to reduce leakage, revenue water ratio was increased to 5.0% by investing a total of 7.1053 trillion won from 1999 to 2003. But from 2004 to 2008, although the cost was similar to that of before in 7.3936 trillion won but revenue water ratio only rose by 3.3% (2008 water supply statistics, Ministry of Environment). That is, as revenue water ratio becomes higher, there is a problem that it costs more to increase the ratio. As a result, when revenue water ratio exceeds a certain point, benefit received by leak reduction is overshadowed by the large cost to reduce the leak and may cause a negative effect instead to the management of the water supply business. Therefore, decision standard for leak reduction that considers economic efficiency becomes needed. As an alternative, Infrastructure leakage index (ILI) or Economic level leakage (ELI) developed by the IWA Task Force must be proposed. But because such methods do not take into consideration of Korea’s pipe net characteristic, water usage configuration, and block and region, there is a problem of appropriate evaluation not being accomplished when applied directly. Therefore, this research will consider economic efficiency suitable for the circumstances of Korea to develop a leakage evaluation model in order to propose the goal for leakage management and assist management condition evaluation.