1 Each state in the USA has a different system.

2 See Marino and Kemper (1999) for an in-depth analysis of water markets and the needed institutional arrangements to make them function.

3 Although recently concerns have been voiced that groundwater recharge in an upstream area, due to water-harvesting structures, may impede flow to downstream areas, effectively leading to a reallocation of the water resource. This issue needs further study.

4 That is, Rs 80 billion and Rs 281.2 billion, respectively (Rs/$ exchange rate used 43:1).

5 According to Bhatia (2005), these estimates may be on the higher side, given that State Electricity Boards tend to lump transmission losses into agricultural subsidies. Nevertheless, the subsidies do constitute a large part of the states' deficits, illustrating that not only the groundwater situation, but the entire states' finances are affected.

6 Politically, an important issue relates to the fact that groundwater users point out that surface water users are usually highly subsidized because frequently neither the capital nor the operation and maintenance costs of surface water irrigation systems are recovered. Accordingly, this leads to a political dilemma, with groundwater users questioning why they should be paying higher prices for water than surface water users do.

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