The governance of common access resources minimizes the likelihood of damage from improper use (Ostrom, 2005). It then requires that the various actors in society at different levels participate and take responsibility for the sustainable management of water resources. The purpose of this paper was to examine the institutional dynamics of the river basin in Tunjuelo, in which live about 2.2 million people and is the most important water source, regulated by numerous laws, decrees and regulations to the management of water resources. To examine this case, an Analysis of Institutional Development (IAD) was applied to different satakeholders. Furthermore, an economic experiment in the watershed were conducted in order to know the decisions related to the water resource conservation. It was observed low governance and continuing with this situation the micro-watershed will decrease its flow and therefore affecting the water available for both rural and urban use. Also, it made evident that water resource is an important determinant to the making decisions related to the sustainable ecosystems management.