A desk review, survey, interview and on-site observation were used to collect data. The impact of external systems on smallholder water scarcity management institutions in the context drought stress was analyzed in this study. The findings show that the external intervention eliminated resilient people’s institutions such as water scarcity (in droughts). Interventions introduce new water management systems that fuel tension, conflict and water poverty. The local water management systems are sustainable and enhance social cohesion and trust while the new program-based institutional arrangements/systems are nepotic and corrupt in terms of ensuring equality and addressing needs of diverse beneficiaries. A local peoples’ institutional approach is recommended to respond to climate change-induced stresses and such approach is capable of managing social, political, economic and environmental dimensions. Policy interventions need to consider a bottom-up approach to accommodate local specific context as well as built on existing local systems that ensure social cohesion among members of community. Interventions that meet pro-poor, inclusive and sustainable objectives need to adopt a human-rights based transformative approaches and such an approach inclusive and sustainable.
Key words: Institutional conflict, drought stress, pro-poor policy.
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