Groundwater resources (GW) account for nearly 30% of the world's sustainable water supplies. Yet, this resource, which is fraught with externalities, has largely been left unregulated. The economic literature on GW is predominantly of a partial equilibrium type. We analyze GW regulation in a...

In a region with shared water aquifers, the use of water by one country becomes an externality to another. A policy to subsidize water is shown to lead to both countries being made worse off. However, such policies tend to receive the support of special interests having water rights, and those...