In this paper, we show the implementation of the Generalized Likelihood Ratio (GLR) method to detect and also identify the size and location of leaks in pipelines. We introduce the use of accurate hydraulic models for hypothesis testing and the use of economics to determine the thresholds of detection and identification. We compare the leak detection power and costs to those of other simple leak detection methods. The economic comparison includes computing the losses for not detecting the leaks (false negatives) and detecting leaks that do not exist (false positives). We also illustrate the improvement in the power of our method by using more-accurate instrumentation.