If the primary goal of regulation is to address a spatial externality within a surface water-groundwater system, such as stream depletion, then targeting land retirement based on that externality (i.e. paying a premium to purchase entitlements that have higher associated marginal externalities) will be cost-effective. 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 hydrologically-damaging but low-cost 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.