The Institutional Setting

The historical and legal context provided in earlier chapters offers useful and differing lenses through which to consider Australian water policy formulation. An alternative, but compatible, approach is to invoke the conceptualization of institutions, which has emerged as an important strand of research within the economics literature. In this case we borrow North's (1990) definition of institutions as the formal and informal rules that constrain an individual's behavior and consequently determine human interaction. In the interests of completeness, we also endeavor to consider organizations or governance structures as part of the institutional arrangements that pertain to Australian water policy.