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Small pressure tanks are often used on boreholes here in Zimbabwe such as the one in my garden. The main purpose is to stop frequent starting and stopping of the pump. The pressure builds up in the pressure tank until the pressure switch tells it to switch off. Thereafter the compressed air in the tank provides the pressure in the pipes.

One problem that can occur is frequent cycling on and off of the pump when there is too little air in the tank. The tank needs periodic draining with a valve at the bottom and a valve at the top to re-fill it with air.

The pressure switch may be adjustable to give the pressures to switch on and off at. One problem is that this give uneven pressure in a small system. Annoying when the hot water in your shower comes from a tank at a constant height whereas the cold water swiches in and out alternately scalding and freezing you!

I prefer to have a raised tank if at all possible. This also guarantees water in the pipes during the frequent power cuts.