This case study was carried out in Chitral, Pakistan, and it focuses on local water governance systems and the local capacity to adapt to climate change. The present-day water governance systems (both community-based and government managed) are compared for functionality and good governance. The community-based system is then assessed to determine its ability to strengthen local capacity for adaptation to water stress. Next, the water policy framework (policies, institutional arrangements, implementation mechanisms and investment) is outlined and its effects on local adaptation are gauged through a cause-and-effect analysis, based on which recommendations for strengthening local adaptive capacity are made.