We found that the major variables affecting multilevel water governance were social interests, administrative capacity, and political, economic, and legal arrangements. The results suggest that there is centralization at the national level, a tendency toward noncollective choice rules, little investment in water resources, and a lack of knowledge concerning conflict resolution mechanisms. For multilevel water governance, a lack of funds is the main social, economic, and political constraint, affecting interactions and outcomes. Nevertheless, there is great potential to improve water resource management in Nicaragua by enacting the self-funding schemes established in the law. Moreover, government institutions, users, and various networks are willing to participate and take action to implement the law.