The Institutional Economics of Water

The Institutional Economics of Water

A Cross-Country Analysis of Institutions and Performance

R. Maria Saleth and Ariel Dinar

This outstanding new book provides the most detailed and comprehensive evaluation of water reform and water sector performance from the perspectives of institutional economics and political economy.

Chapter 9: Institution–Performance Linkages: Robustness and Contextuality

R. Maria Saleth and Ariel Dinar

Subjects: economics and finance, environmental economics, institutional economics, environment, environmental economics, water


The analysis of empirical results in the preceding chapter has provided us with rich insights into the process of institution–performance interaction within the water sector. It enables us to identify the most significant institutional aspects and show how their effects – both direct and indirect – are being channeled through various layers of institutional and performance linkages to be transmitted ultimately to water sector performance. The empirical knowledge on the relative significance of institutional aspects and their impact-transmission channels is invaluable for designing reform packages, including setting and sequencing institutional priorities, based on their linkage roles and relative performance impacts. The policy value of the empirical results, however, depends critically on their reliability and credibility as evaluated in terms of their robustness with changing contexts and their sensitivity to factors both endogenous and exogenous to our sample and estimation contexts. The main objective of this chapter is to evaluate the robustness and sensitivity of the results derived and discussed in previous chapter and to establish, thereby, their dependability as an empirical basis for designing generic reform packages, to be attempted in the next chapter. EVALUATING ROBUSTNESS AND SENSITIVITY: CONTEXT AND APPROACH The robustness and sensitivity aspects can be evaluated by comparing the results discussed in Chapter 8 with those obtained in different estimation contexts. These estimation contexts are defined by certain distinct characteristics endogenous to our sample, such as sample size, respondents’ disciplinary backgrounds, and the reform status of sample countries. In other words, by categorizing our sample into subsets in...

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