Once we agree that appropriate institutional arrangements play an important role in explaining the level of performance of the water sector across countries, we still face the overwhelming role of defining, measuring and comparing institutional performance. Unfortunately, water institutions in many countries are dated and weak. While the evaluation of water institutions is critical to identifying the gaps between needed and actual arrangements, and consequently deriving reform strategies, methodological issues and data problems present major challenges for such comparisons. This paper develops the Water Institution Health Index, based on a set of legal, policy, and organizational variables identified from an institutional decomposition approach. The index is constructed for 43 countries based on an international sample of 127 water experts; it evaluates and compares the relative health of water institutions and their components across these countries, and demonstrates the linkage and consistency of this index with other economic, social and governance indicators.

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