Urban water systems will be increasingly challenged under future climates and global pressures. Meeting challenges by reconfiguring water systems to integrate supplies and deliver multifunctional uses is technically well described. Adjusting the institutions that frame the management of these systems is not well operationalized in practice or conceptualized in theory. This study seeks to address this gap through an institutional analysis of Perth, Australia, a city where drought crisis has put under pressure both management practices and the institutional setting that underlies them. The study found that while trusted practices moderated water scarcity, the stability of the institutional setting may not facilitate a shift toward adaptable institutional configurations suited to future conditions. The results identified three key ingredients for a flexible institutional setting: (i) feedbacks in the system through better information management, (ii) reflexive dialogue and strategic use of projects to generate greater learning opportunities, and (iii) policy level support for sector-wide collaboration through progressive agendas, incentives for innovation and capacity building in stakeholder and community engagement. Further, the results suggest that a deeper understanding of institutional dynamics is needed to enable adaptive governance. The paper provides an analytical framework for diagnosing how greater adaptive capacity might be mobilized through influencing these dynamics.

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