Institutional arrangements, here for short called 'institutions', are described as the 'rules of the game' (North, 1990) within which stakeholders act. They include formal laws and regulations, informal norms and organizations. In the context of groundwater management, we can imagine national or state water laws dealing with groundwater, irrigation laws, their regulations and decrees, as well as norms developed and applied in communities or irrigation command areas regarding groundwater development and use (well construction and spacing norms, water abstraction rules, etc.). These latter norms may be written or informal.
Such institutional arrangements, whether devised at national, state, provincial or community levels, and whether formal or informal, define and affect instruments devised to manage groundwater. Typical instruments include groundwater use rights, abstraction permits or concessions, groundwater tariffs, subsidies and, to a certain extent, groundwater markets. These instruments are called direct instruments, given that they are designed to directly affect groundwater management decisions by stakeholders. Importantly, however, there is also a range of indirect instruments that stem from other sectors, but that have an impact on groundwater use, such as energy pricing, agricultural produce pricing and trade policies (Kemper, 2003).
A further important ingredient in the institutional framework is the organizational form for groundwater management. For instance, in most countries, groundwater is formally managed by government agencies, often at the central
Formal institutional arrangements
Informal institutional arrangements
Indirect institutional arrangements
and sometimes at a lower administrative level. With increasing groundwater scarcity problems, however, aquifer management organizations, which consist of local stakeholders, have started to develop. This tends to coincide with changes in the laws governing groundwater management, but can also happen spontaneously.
Figure 8.1 illustrates schematically how all of the above constitute the institutional framework that conditions groundwater management, with the different institutional arrangements, instruments and organizational forms influencing each other. This chapter provides an overview of the 'menu of institutional ingredients' that can be combined in a variety of ways in order to achieve improved groundwater management, depending on the specific characteristics of an aquifer, a country or a region. The chapter also highlights the importance of the organizational management form with regard to the expectations that one would have concerning the performance of an institutional framework for groundwater management.
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