Embracing the ambiguity: Tracing climate response diversity in urban water management

Abstract Climate change is a management and governance challenge requiring diverse potential responses. This article highlights the critical role public managers play in navigating the response diversity of such governance systems. Response diversity is the rule‐based set of options available for responding to unexpected service disruptions and is distinguished from ambiguity, which holds a negative valence within public administration. We first develop theoretical propositions about how institutions influence response diversity, drawing on public administration, resilience, and cognitive science research. Then, we use the Institutional Grammar and Institutional Network Analysis tools to empirically trace the rate‐making processes in two U.S. urban water utilities. We conclude that institutional designs do distinctively influence response diversity and are therefore key for evaluating the climate adaptability of heavily engineered infrastructure systems. Specifically, we identify important differences in the diversity of information, participation, and heuristics used for selecting investment strategies.