if the primary goal of regulation is to address a spatial externality within a surface watergroundwater system such as stream depletion then targeting land retirement based on that externality ie paying a premium to purchase entitlements that have higher associated marginal externalities will be costeffective note however that if there is a strong positive correlation between the marginal benefits of groundwater use and the marginal externality of groundwater use the optimal solution may be to retire a relatively large area of less hydrologicallydamaging but lowcost land this includes voluntary programs undertaken by users to manage or reduce groundwater use or collective mechanisms induced by regulatory framework requirements it is possible for local groundwater users groups to introduce binding management policies collectively voluntarily often in conjunction with other higher level instruments or sometimes set up independently