Risk-pooling and institutional innovation in water service transitions

One quarter of the world population lacks safe drinking water. As existing water service providers struggle to make sufficient progress towards the water SDG by 2030, decentralised rural service providers are emerging as possible solutions with pluralist governance arrangements addressing varying water scarcity and quality risks under increasing hydroclimatic extremes, but also financial, operational and social risks. Pooling risks through pluralist arrangements between public, private and community actors with diverse, sometimes competing logics represents both a dilemma and an opportunity for institutional innovation. How pluralist institutions pool risks across different configurations of public, private and community management remains a knowledge gap – theoretically as the relationship between risk and institutional innovation is not fully understood and empirically as the outcomes of such innovations have not been examined systematically. I advance institutional theory of risk, drawing on Douglas’ cultural theory of risk and Ostrom’s approach to institutional diversity. Bridging these theoretical perspectives leads to better understanding how risk-pooling impacts the sustainability of water services, especially under drought conditions. I critically review literature on risk governance in pluralist arrangements and present results from case study research with service providers in Africa, Asia and Europe to identify key institutional design principles of pluralist arrangements. Workshops with service providers and regulators afford insight into the challenges of creating an enabling environment for pluralist organisations and developing comparable standards for monitoring and benchmarking to improve governance. Assessing differences and similarities in risk-pooling strategies and their effect on institutional design thus contributes to informing policy and practice towards safe water for all.