Data, information, knowledge, and wisdom about groundwater resources and their natural and social contexts are fundamental for effective groundwater management and governance. Despite technological advances in water data collection, traditional water monitoring systems remain focused on "hard data" and technical approaches, overlooking the socio-economic dimensions of water governance within its social process. This article introduces the conceptual framework of the “Water Governance Observatory” as an innovative solution to bridge the gap from data to knowledge and wisdom in stakeholder problem-identification during decision-making. The main goal is to design a dynamic system that integrates three pillars: transparency through inclusive participation, flexibility in addressing multi-scalar issues, and adaptability aligned with environmental-social changes. This enables systematic problem discovery, prioritization of actions, and development of operational agendas to improve water governance. The proposed observatory transforms data into meaningful knowledge and wisdom and fosters conflict-driven dialogue, promoting the socialization of water through strengthening the public water sphere, consensus-building, and implementation of sustainable solutions. Its outputs are categorized into six operational agendas: new data production, analytical model development, system understanding enhancement, reform of existing processes, design of new processes, and continuity of effective processes. The research emphasizes shifting water governance from a “technically-centered” to a “socially-evolving” process, highlighting critical stakeholder participation and local process analysis in revealing hidden issues and designing local solutions. The framework rests on three principles: 1) social problem identification, 2) evolution from data to knowledge, and 3) moving beyond participation towards incentive systems and actor alignment through an enhanced public water arena.