While national and sub-national capacity is of primary importance in multi-level governance relations, the line between co-ordination and capacity is not always clearly demarcated. Co-ordination can help in disseminating good practices and spreading the benefits of diversification of water policy, thereby also building capacity. Thus, co-ordination and capacity building go hand in hand: they are synergistic processes that can be mutually reinforcing, provided there is a territorial approach to water policies.