Water pricing is considered a crucial issue for decision makers, water service providers, and consumers. Water pricing can vary among and within economic sectors. For example, water pricing within the agricultural context can vary based on agricultural area, agricultural output, the value of the land, or the amount of material used for agricultural production.
Groundwater users have an incentive to use water efficiently when it has a price. If the price is right, users will have incentives to use less water and introduce water-saving technologies, thus freeing water for other uses. In groundwater, pricing issues are distinct from surface water, given that abstraction of groundwater resources usually takes place on private land and with private equipment. Therefore, there are actually two options for pricing: pricing the resource itself or pricing the other inputs needed in order to pump groundwater such as the pump, borehole and energy.