Because many of the policy innovations presented in this section involve the use of economic instruments, the chapter begins with a brief review of some of the characteristics of water that limit the extent to which the resource can be managed as an economic good. Policy solutions with the potential to contribute to resource decoupling are described for the agricultural, industry, and municipal water supply sectors. In addition, systems-level policy approaches with the potential to encourage efficient use across sectors are also described. The section concludes with an examination of equity considerations that should be included in the design of policy measures.