Nonpoint source pollution from agriculture is a major threat to the quality of surface and ground waters in the European Union (EU) context. The EU Water Framework, adopted in 2000, encourages Member States to ensure the protection of water bodies used for the abstraction of water intended for human consumption. As part of the implementation process of the EU WFD in France, the protection of the most threatened drinking water catchments is required. While the EU agri-environmental policy, based on contracts between government agencies and farmers, remains the main tool for the definition and implementation of measures targeting diffuse pollution, cooperative agreements involving drinking water suppliers and farmers have been developing. Such voluntary cooperation appears to be framed by various innovative institutional arrangements. The paper aims at characterizing the new institutional arrangements governing cooperation between drinking water suppliers and farmers and their potential for limiting non-point source pollution from agriculture in the French context. Transaction cost economics are used to assess the benefits and costs of institutional arrangements for participating stakeholders. Transaction costs correspond to the information collection costs, bargaining and decision-making costs and the monitoring and enforcement costs of agreements (McCann, 2005). The SES (Social-Ecological System) framework (Ostrom, 2009; McGinnis and Ostrom, 2014) serves as a basis for identifying the factors affecting the benefits and costs of cooperation. In this frame, the characteristics of institutional arrangements as well as factors linked to the drinking water resource and the stakeholders involved are considered. The analysis relies on a two-step methodological approach. First, a literature review and interviews with 12 stakeholders of the water and agriculture policy fields at the national and river basin levels led to the characterization of innovative institutional arrangements and their prevalence in the French context. In the second stage of the study, in-depth case studies of collective action in six drinking water catchments were realized, on the basis of 36 interviews with local stakeholders involved in co-operative agreements. Three main types of institutional arrangements were identified: (i) Payments for Environmental Services (PES)-type of arrangements, (ii) environmental land rental contracts and (iii) green public procurement contracts for agricultural products. The analysis shows that innovative institutional arrangements present some advantages for limiting nonpoint source pollution from agriculture. More particularly, a greater autonomy in contract design allows for the definition of actions tailored to the local context and favours the participation of both water suppliers and farmers. However, high transaction costs prevent the development of such arrangements in contexts where the size of the water catchment is large and drinking water suppliers lack the necessary resources and technical skills to sustain cooperation with farmers.