As Pacific societies' rule-making institutions moved toward representative governments, some societies hybridized their customary systems within contemporary governance structures. Hybridized arrangements—structures that integrate customary institutions within constitutional systems—can sustain or lead to adaptive natural resource management strategies. Achieving effective adaptive resource management in a hybridized governance system, however, requires a perspective-based response to the complex socioeconomic and political drivers influencing environmental outcomes. Sociopolitical transformations, for example, may bolster economic development and land-use activities, potentially leading to detrimental ecological effects on watershed resources, such as poor water quality and reduced coral abundance. Examining major drivers of sociopolitical change in a local context can help shed light on resource governance outcomes and barriers to effective adaptive management. In 1994, after 100 years of foreign occupations, the Republic of Palau transitioned from customary rule to an American-style federalist entity. Under this new regime, Palau's small, inhabited land mass (459 km2) was divided into 16 states, each with different institutional arrangements and degrees of authority granted to customary leaders. These transformations ushered in a time of rapid socioeconomic change and intensified land-use activity. Using a mixed methods approach, this dissertation explores the effects of these sociopolitical transformations and the response of Palau's social system to environmental change. First, a historical analysis of state governance structures, their implementation, and watershed management actions was conducted for 10 states. Next, the magnitude of environmental changes from 1985 to 2015, specifically sediment delivery patterns, was assessed by reconstructing coral geochemical signatures of two trace metals, barium and manganese, in two watershed systems. Finally, a policy network analysis of the Belau Watershed Alliance (BWA), a bridging organization created in 2006 to address degrading watershed conditions, was used to examine the causal relationships between network structures and watershed governance actions. Findings show state governance arrangements vary along a gradient of hybridization from constitutional-dominant (level 1) to customary-dominant (level 5). State governments at either end of the gradient—levels 1 and 5—are more conflict-prone and have experienced impediments to watershed management. Coral geochemical findings link the construction of a major ring road that encircles the island (the "Compact Road") and years of heavy rainfall to increased sediment delivery in coral habitats. Different patterns in trace metal ratios between the two watershed systems studied suggest localized land use events as drivers of increased sediment delivery. All coral core samples showed statistically significant increases in trace metals between 2002 and 2007, when public outcry over increased sediment delivery catalyzed creation of the watershed alliance (BWA). The network facilitated by the BWA demonstrates causal relationships between network structures and governance processes. While policy formulation and transformative learning occurred in times of high network density, for example, density was lowest at times when planning and implementation processes were underway. Over the past century, Palau's society has undergone sociopolitical transformations leaving permanent imprints on the nation's institutions, values, and social norms. This research reveals environmental outcomes from these transformations and demonstrates the continued legacy of customary leaders as influencers in resource governance. Upholding cultural institutions may safeguard Palauan society's ability to adapt and respond to future environmental change. The findings from this dissertation may be applicable for other societies facing similar transformations alongside waning customary traditions.