The management of groundwater resources for use in agriculture is an issue that reaches far and wide; many of the world's most productive agricultural basins depend on groundwater and have experienced declines in water table levels. There is a socially optimal rate of extraction that can be modeled, measured, and achieved through policy and a complete definition of the property rights that govern groundwater. However, several factors may affect farmers' groundwater use decisions and behavior and may lead them to overextract groundwater. These factors include increases in irrigation efficiency, perverse incentives from policy, institutional incentives, and externalities.


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