Abstract
Bringing into perspective, factors leading to the vulnerability of water resources, focus is placed on institutional issues as this is progressively becoming thorny in most water use sectors nationally. Using institutional economic theory a generic water institutional framework is developed to assist in shaping institutional arrangements towards achieving economic and social objectives simultaneously. This framework may be useful for South African her quest for a new institutional arrangement that will lead to true decentralisation. From this generic framework an alternative institutional arrangement is suggested for South Africa.