In this paper we identify a number of critical water problems and discuss the key role institutions can play in their resolution. We develop our framework for analysis based on Williamson's (2000) four-levels of institutions (e.g. norms, laws, and policies). Next, we discuss the problems of designing institutions. This is followed by a section arguing that we have, in the past, overinvested in water infrastructure and underinvested in water institutions. Next, we discuss some of the changes that have occurred in the developing world as it has become integrated into world markets and the implications this has for water. We then list five priority areas where new water institutions need to be developed and old ones modified or discarded. Finally, we conclude with a call for a greater emphasis on the development of new and improved water institutions, particularly water rights.

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