This study was commissioned by the Water Research Commission of South Africa to contribute to the establishment of institutions through which water markets can operate efficiently and help to ensure the effective allocation of water-use rights. In this context, institutions refer to the rules that govern economic actions. These rules are provided by, amongst others, laws, norms and regulations and administrative structures. Depending on their design, they can facilitate or constrain the activities of economic actors. The National Water Act (1998) discerns between eleven types of water-use rights. This document focuses mainly on the transfer, via a regulated market, of abstraction water-use rights, although mention is also made of transfers, via a market, of discharge water-use rights.