Factsheet #32

Contractual arrangements

Instrument Type


Governance Level


Governance Mode


Water management topics addressed

Drought & water scarcity
Water abstraction for irrigation and other economic activities
Water quality issues due to nutrient pollution
Water quality issues: Other reasons

Implementation requirements

Financial capacity


Human capacity


Political buy-in


Timeframe for implementation


#32: Contractual arrangements


Contracts across levels of government are also frequently used in multi-level relations to help manage interdependencies and solve some institutional weaknesses. Contracts enjoy a degree of flexibility of use and diversity of application, permitting governments to reorganise rights and duties without requiring a constitutional or legislative change. 


In most countries, contracts function as tools for dialogue, clarifying responsibilities, capacity building,  experimenting and thus for learning.  Impact evaluation should be encouraged, so as to make use of the results in adjusting the policy. Bilateral commitments validated by contracts among levels of government must be as verifiable as possible. Collaboration through contracts makes the need for strategic leadership at the sub-national level even more vital. In the water sector, “river contracts” are intended to develop and restore the multiple functions and uses of water in response to the needs of a community of users, through dialogues between different parties.

Example: The Federal-Provincial Agreement on Great Lakes Water Quality in Canada

The Canada-Ontario Agreement on Great Lakes Water Quality and Ecosystem Health is a federal-provincial agreement that guides the efforts for the restoration and protection of the Great Lakes ecosystem. In particular, the two parties of the agreements are the Canadian government and the one from Ontario, which commit themselves to cooperate and coordinate their actions towards the protection and preservation of the ecosystem of the Great Lakes. The agreement is also used by Canadian federal departments to dialogue with the authorities of the Ontario province to ensure that the country complies with the obligations under the Canada-US Great Lakes Water Quality Agreement (GLWQA).


OECD (2011). Water governance in OECD countries – A multilevel approach. OECD Studies on water (p. 93f) https://www.oecd-ilibrary.org/environment/water-governance-in-oecd-countries_9789264119284-en Retrieved on 22 September 2020.

The Canada-Ontario Agreement on Great Lakes Water Quality and Ecosystem Health
https://www.canada.ca/en/environment-climate-change/services/great-lakes-protection/canada-ontario-agreement-water-quality-ecosystem.html Retrieved on 22 September 2020

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