Urine diversion (UD) systems require less water to operate and thus have the potential to reduce water use by 90% compared to traditional toilets. Drawing on an applied research project in South East Queensland, Australia, this chapter analyzes the institutional environment and social networks which both supported and ultimately hindered the UD research trial and ongoing system uptake. Increasing interest in UD systems, both nationally and internationally, has in part been driven by growing awareness of global phosphorus scarcity. The chapter explores a specific case of emerging innovation – decentralized UD systems in a peri-urban setting – whose institutional context played identifiable roles both in securing its initial success and subsequently in hindering successful development of the complete stages of the Ecovillage trial. It concludes with a discussion of the need to manage the politics of innovation in basic infrastructure for essential services by considering multiple institutional factors and actors supporting and facilitating the emergence of innovative technologies in practice.