In the Netherlands, for instance, farmers are exempted from a groundwater tax (up to a certain threshold), which has encouraged them to use multiple smaller pumps to avoid the tax (OECD, 2008). Such market systems are a cost-effective method to achieve any given water use reduction or hydrologic target as they allow equalisation of the values of marginal products (Kuwayama and Brozovic, 2013, Palazzo and Brozovic, 2014). There are, however, significant preconditions to a successful groundwater market: a strong property rights system, a robust price determination mechanism with information, and infrastructures are required (Skurray et al., Although they may not generate revenue for the regulator,16 they do result in transfers of funds between buyers and sellers of water entitlements.