This study examines water governance and management outcomes across countries in the Middle East, a region characterized by extreme water scarcity but substantial variation in institutional capacity and policy performance. Drawing on comparative evidence from multiple countries and water systems, the analysis investigates why similar levels of hydrologic scarcity produce markedly different outcomes in groundwater sustainability, urban water supply, and agricultural water use. The review evaluates how property-rights clarity, monitoring credibility, pricing structures, and regulatory independence shape system performance under scarcity. Across the literature, technical interventions, including desalination, irrigation modernization, and aquifer recharge, consistently fail to deliver durable improvements without enforceable institutional arrangements. Climate change acts primarily as a stress multiplier, amplifying existing institutional strengths and weaknesses rather than independently determining outcomes. By synthesizing fragmented insights across disciplines, this review reframes water scarcity as a governance-mediated outcome and offers a diagnostic framework and research agenda to improve water security amid increasing climate stress. The findings highlight institutional reform as a central lever for achieving sustainable water management in arid regions.