The Khasi Hills, in the northeastern part of India, are governed by traditional institutions, popularly known as dorbar shnongs or village councils. This article examines how these institutions navigate the challenges of urbanisation and modernisation through the lens of social capital. Drawing from the case studies of two localities, Nongkhyriem and Nongrah (urban) and Siejiong village (rurban), the study analyses how different approaches to water management reflect broader patterns of institutional adaptation and social change by demonstrating how the dorbar shnong system institutionalises social capital in water governance, with varying outcomes across localities. While Nongkhyriem exemplifies successful community-based management through strong social networks and equitable distribution, Nongrah’s market-oriented approach highlights the tension between traditional values and modern economic institutions. The findings suggest that traditional institutions can effectively manage urban water resources when they successfully balance social cohesion with adaptive governance, offering insights into similar contexts where indigenous institutions face urbanisation pressures.
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