The governance of water: An institutional approach to water resource management

Problems of managing water resources within jurisdictional or sectoral boundaries have long been debated. Various methods to demarcate a water resource management unit have been suggested, including watershed, river basin, and problem-shed approaches. Management based on these boundaries requires better inter jurisdictional coordination among decision-makers within the specified basin. Issues arising from conventional jurisdiction-based or sector-based water resource management are apparent, and inter-jurisdictional coordination has posed tremendous challenges for the implementation of basin-wide management schemes.; Three governance structures are evaluated with respect to water resource management—Market, Hierarchy, and Communal. Their mechanisms, effectiveness, and efficiency in achieving coordination among decision-makers are revealed. Comparative analysis is made using transaction cost theory. The Lake Biwa-Yodo River basin and the Potomac River basin case studies are discussed as examples of formal and informal institutions, and the transactions they managed, which gave rise to immediate and long-term results.; In particular, the studies show drought management and water allocation are best managed under governance structures that recognize the public good (or social welfare) aspects of water resource management. Under hierarchical structures a central entity exists and intervenes under extenuating circumstances, for the benefit of all stakeholders. Under communal structures, high goal congruence lends itself to the benefit of participants. In terms of transaction cost analysis, a market structure requires extensive efforts to arrive at well-defined, transferable water rights. It requires significant time and planning for water rights to be secured, transferable rights and to ensure drought management and fair allocation function at the same time.; Communal and hierarchical approaches are flexible to change, regard water resources as public goods, and are able to implement long-lasting results. Through these governance structures, policies, practices, and beliefs about water resource management may co-mingle, and evolve into basin-wide institutions.