This research provides a broad picture of water sector governance in Spain, a country dealing with serious water stress and quality problems. Moreover, a decentralized structure of regional and local governments supports the design and development of water policies. In this context, governance emerges as a key issue to improve water resources allocation. Several key policies and institutional features have been described, with a special attention to economic instruments and the role of private-public partnerships (PPPs). Definitively, greater efforts in the policy-making and coordination processes are needed in the Spanish water sector.