African Water Laws - Natural Resources Institute

SHAH
Figure 2. Level, frequency and purpose
In NIE, the most interesting aspect of study of institutional change is about ‘why economies fail to undertake
the appropriate activities if they had a high pay-off’ (North 1990). India’s water sector is replete with situations
where appropriate activities can potentially generate a high pay-off and yet fail to get undertaken; in contrast,
much institutional reform being carried out will likely not work because it entails high transaction costs and
low pay-off.
In analyzing the Indian institutional experience in the water sector, our key propositions are embodied in the
‘payoff-transaction cost matrix’ in figure 4. Several kinds of institutional reform tried or contemplated have
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