Institutional function and urbanization in Bangladesh: How peri-urban communities respond to changing environments

Urbanization processes are characterized by rapid change. The peri-urban context represents such a transition zone during urbanization. Here, change creates new realities and new demands, for which existing institutions may no longer suffice. Yet institutions do not change easily, as they typically exist to provide stability and predictability during social interactions. It poses a challenge for peri-urban actors looking for ways to manage their needs within this changing context. In peri-urban Khulna in Bangladesh, this refers to drinking water access. Our research examines how actors in two peri-urban communities in Khulna responded to changes in drinking water access via institutional mechanisms. We do so using the credibility thesis as the starting point, complemented with theories from the field of institutional economics. We expect that system change will lead to institutional change based on (1) actors’ evaluations of institutional function and credibility, (2) a process of satisficing, whereby the costs, resources, and benefits of institutional change are considered in selecting an alternative that produces a satisfactory outcome, (3) whereby the nested structure of institutions strongly influences associated costs and resources available to actors to affect institutional change. The analysis is undertaken using the Institutional Analysis and Development framework. Case study findings offers insight into institutional function in peri-urban contexts. It demonstrates the difficulty of achieving institutional change and highlights the role of the informal context in peri-urban areas. Our paper shows the added value of understanding the institutional context during urban transitions and offers insight into the design of empirical studies on institutional change.