If the regulatory goal is to reduce aggregate water use, the entitlement system will have a single market-clearing price that is equal to a tax that would achieve the same aggregate pumping. In this case, the marginal benefits of water are equalised across all traders, and a frictionless transferable entitlement scheme will by definition achieve the optimal allocation (e.g. Montgomery 1972, Sunding et al., The more binding the constraint on total water used, the larger the equilibrium entitlement price.