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The EU Water Framework Directive (WFD) promotes a change of European water governance towards increased stakeholder participation and water management according to river basins. To implement the WFD, new institutional arrangements are needed. In Sweden, water councils have been established on the local level to meet the requirements of the WFD of a broad stakeholder involvement in water management. The aim of this paper is to contribute to the knowledge on institutional arrangements for meeting the WFD requirements on stakeholder participation in local water management. A case study of two adjacent catchments in southern Sweden is presented to analyze how institutional legacy affect organizational arrangements and stakeholder participation. Based on literature studies and semi-structure interviews, the case study is analyzed with special emphasis on the scope, the organization and the activities in practical water management in catchments. The result shows different institutional arrangements for water management, despite similarities of the catchments’ characteristics and the regulatory framework on national and regional level. The study identifies four important factors regarding institutional arrangements for water councils and local stakeholder participation in water management. Firstly, an organization involving key stakeholders that are committed to the scope and goals of the water council and willing to provide resources for the implementation of the planned activities. Secondly, institutional arrangements that include a willingness for flexibility and awareness of the need to include the most relevant stakeholders. Thirdly, a clear leadership to drive the process to realize the specific goals and assess the outcome. Fourthly, voluntary involvement of farmers to take part in the implementation of the measures and contribute with knowledge and experiences regarding local conditions.