Governance Matters: Reducing Water Stress through Effective Institutions in MENA Countries

The Middle East and North Africa (MENA) region faces acute water scarcity, with recent assessments indicating that roughly 83% of its population lives under extremely high water stress. Given the structural nature of this challenge, the effectiveness of public institutions in managing water resources and mitigating demand pressures emerges as a critical determinant of water stress outcomes. In light of these considerations, this study examines the association between government effectiveness and water stress across 17 MENA countries from 2009 to 2021. Government effectiveness is measured using the WGI Government Effectiveness index, which captures perceptions of public service quality, civil service capacity, policy formulation and implementation, and the credibility of government commitments. Using the Panel-Corrected Standard Errors (PCSE) and the Feasible Generalized Least Squares (FGLS) estimators, with the Fama-MacBeth (FMB) regressions as a robustness check, the analysis finds that government effectiveness is negatively associated with water stress (β = -0.190). On the other hand, GDP per capita and urbanization are positively associated with it (β = 0.871 and β = 0.129, respectively); precipitation and foreign direct investment are negatively associated with water stress (β = -0.385 and β = -0.018, respectively). In the MENA context, the positive coefficients of GDP per capita and urbanization suggest that economic expansion and rapid urban growth tend to increase agricultural, industrial, and municipal water demand, often faster than water infrastructure and management capacity can adjust. Taken together, the findings indicate that governance capacity matters because stronger implementation and administrative performance can help contain demand pressures and support more sustainable water management in a highly water-stressed region.