Such incentive-based schemes may produce revenue for the regulator (taxes), may be costly to the regulator (subsidies), or may involve payments only between producers (trading). The broad categories of instruments considered here are taxes (whether on pumped water or on a proxy), transferrable entitlement systems, and buyouts of land or water entitlements. Instruments that provide incentives related to the physical quantity of groundwater used, such as pumping taxes and some transferable permit systems, require the ability to monitor water use accurately and to confirm that changes in water use are occurring as a result of the incentive.