The metabolisation of water to serve urban consumption through drinking and waste water canals is an important yet understudied aspect of urbanization in Indian cities. The empirical evidence from fieldwork in Budhera village in peri-urban Gurgaon suggests that the surface water that flows in the canal systems is open to seepage, theft, waste water irrigation, and these processes have a profound impact on agricultural livelihoods in the vicinity. The structure of the canals in relation to the geographic conditions of land, social relations and technologies create differentiated risks and opportunities for farmers and produce complex distributional impacts that are unplanned and arbitrary. This article looks at different types of conflicts that emerge in this context while also focusing on new norms, institutions and practices that support the changing rural–urban flows of water and prevent conflicts of interest from emerging into outright conflicts.