Numerous scholars have explored the role of polycentric systems in the governance of common pool resources with studies generally painting a static picture of overall system structure and institutional interrelationships. There remains a limited understanding of how such systems evolve to affect access to, use of, and control over a common pool resource. We propose that for natural resources, polycentric systems evolve out of an iterative process between the physical/ecological characteristics of the resource and the technological/legal/socio-political factors affecting resource use. Problems that arise from use can engender conflict and cooperative processes that motivate institutional formation and subsequent institutional linkages over time to resolve the problems. This can occur for example bottom up - where a polycentric system emerges from local resource conflicts, and our study of six California groundwater basins illustrates this process. Our findings suggest a relationship between pronounced hydrologic linkages and stronger institutional linkages, suggesting that the physical characteristics of natural resources are one driver of polycentric formation. Additionally, impacts from resource use can lead to both conflict and cooperative processes between basins that shape institutional formation and institutional interactions, pointing to impacts from resource use as a second driver of polycentric formation.
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