The problem could be remedied with a combination of education and very inexpensive technology. Having lived in remote parts of Ethiopia, and traveled to a few other third world countries I have seen this problem firsthand.
The challenge that many do not understand is that the infrastructure that makes things like education and distribution of cheap technological tools easy in the developed world, simply does not exist in these places. They have no mail delivery, no government offices, no television or radio, and often no roads. In many cases the affected people may not be literate, and may speak a language that is different from the primary language of the country. Ethiopia for example has 85 spoken languages.
In Ethiopia the most frequent request I received from children was for pencils and paper. They had a local school were I was at, but no supplies and had to share pencils and paper. Something as simple as a flashlight (a torch) was impossible to come by. For this reason, one of the most essential things that is needed in many undeveloped areas that would make solving these problems possible is a sort of government infrastructure consisting of mail service, roads, government agency contacts who are responsible for distributing and educating, and eventually other basic communication tools like phones, although this advance is probably many years away. The developed world does not understand that people still live in huts made of sticks and grass, tents made of skin, and herd goats, camels, and cattle for their livelihood in many places in the world, not much differently than they lived 2000 years ago.
The water problem has a twofold solution. No doubt you have seen examples of well-drilling with manual or electric pumps installed to supply water to entire villages. Wells can be dug by hand, and often are. I have seen examples of seasonal wells dug in riverbeds as much as twenty feet deep that served well. Well drilling equipment has gotten so compact that it is now possible to load a drill rig into the back of a Land Cruiser or a small pick-up truck. A gasoline powered rig that will drill a six inch hole to over 100 feet deep costs about US$8,000 from commercial suppliers.
See:
http://www.lonestarbits.com/
The portable drilling equipment could be built as a cottage industry in some countries at a far lower cost. A rig like this could drill several wells a week. The benefits would include a reliable, local, and safe water supply, increased agricultural production, and more stable populations. The local community would have to organize to maintain and protect their well or wells. Costs of manual pumping equipment would have to be subsidized in some way. Although I would advocate having a geologist locate well sites, a hundred years ago my great grandfather drilled water wells and he didn't need a geologist to tell him where to drill. Common sense often works well for this.
Even lower tech methods of water treatment exist. A few barrels of water combined with a supply of alum can supply a family with safe drinking water. The process has been used for decades and is still used in many parts of the world.
"The combined process of coagulation and filtration is commonly used throughout New Zealand and is effective at removing dissolved and colloidal colour (natural organic matter), turbidity (suspended solids), algae (phytoplankton), bacteria, viruses and protozoa (e.g. Giardia and Cryptosporidium)."
From:
http://www.moh.govt.nz/moh.nsf/0/5A25BF7…
This process requires nothing more than measuring the correct quantity of alum (aluminum sulphate) to add to the barrels of water, which also act as settling tanks. It allows use of water from surface water bodies such as rivers or lakes as drinking water. The cost of alum from commercial suppliers in the US is about US$0.35 per pound, purchased in 2500 lb lots. It is available worldwide, probably at lower cost. Alternative chemicals exist, such as ferric sulphate, which may cost slightly more. One pound of alum will treat about 4,000 gallons. It is not 100% effective at killing pathogens, but is much safer than drinking water directly from contaminated sources, which many people do in some undeveloped areas.
In some areas the only water treatment that may be needed is the simple addition of bleach (sodium hypochlorite solution). This was used by my family in our cistern for years to treat the rainwater that we gathered from our roof. One gallon of 5.25% bleach will treat about 9,000 gallons of water. Combined with flocculation/coagulation with alum it is quite effective and quite cheap.
Now considering that the cost of alum and bleach for a family to treat water with for about a year should not exceed the value of say one goat, this type of treatment is not unaffordable. The knowledge of how and why to do this is more critical. Most developed nations have saved their citizenry from having to know how or why their water is treated by simply doing it for them. Creating a "kit" that has measuring spoons and some diagrammatical instructions that comes along with the chemical kit would be the ideal way to distribute water treatment "technology." Distribution of small 'kits' should be combined with instructional demonstrations, and soon enough the knowledge would be distributed widely.
The methods of treating water and drilling wells are not really the problem. Simple equipment and cheap methods exist, as they have for centuries. The part that is missing in most areas where this is a problem is that there is no educational information available for people whose lifestyle and environment has gradually changed over generations, leaving them without proper knowledge of how to deal with bad water. This is where either an NGO or a local government could be supported with monetary resources, equipment, and access to training for local personnel.
Modest amounts of effort could solve this problem within years. The biggest obstacles have been, and will always be finding ways of distribution where no infrastructure exists, and education that can cross cultural and language barriers. These however are 'human engineering' problems that can be solved as long as the need is recognized by the people who have the ability to institute distribution and education. That motivation is lacking in many undeveloped countries, but if they are convinced that such basic infrastructure as clean water supply will allow everyone to prosper and live better, the problem can be solved.