Mechanism Design in Regional Arrangements for Water Governance

Governing shared water resources requires collaboration among multiple actors, often attained through formal or informal institutions. This paper analyzes how governments design institutions to address common challenges for collective action. More specifically, the paper asks whether variations in levels of transaction cost risk influence the design of formal mechanisms for monitoring, ensuring compliance, or sanctioning noncompliant behavior in the governance of shared water resources. To that end, four intergovernmental agreements for securing access to unfiltered drinking water in the United States are studied: in Boston, New York, Portland, and San Francisco. Results indicate that transaction cost risk may play a role in the design of monitoring and sanctioning mechanisms, but that variations in design are more nuanced than originally anticipated. Also, the analysis highlights the existence of common design strategies for addressing conflict, regardless of the levels of transaction cost risks.