From SimCity Wiki
Water tower are cheap and reliable structures that can be used to solve your city's water problems. In order for water towers to work, they must be built on top of ground water reserves. You can check the water table by opening the water map. Areas with darker blue colors have more water than areas with lighter blue colors. Be sure to plop your water towers away from ground pollution (brown areas in water map). Don't build water towers near garbage dumps or sewage outflow pipes.
- Water towers are perfect for early game and small towns.