The synergistic effects of canals and tanks in groundwater recharge that contribute to an economically sustainable path of groundwater extraction are examined. Thirty farmers each with groundwater wells located in canal command (GWCI), in tank command (GWTI) and in solely well-irrigated areas (devoid of surface water bodies) (GWSI) are studied in Tumkur district of Karnataka.

Applying Pontryagin's maximum principle to find the economically sustainable path of groundwater extraction, results indicated that by following the optimal path, the life of groundwater wells will increase by an additional 8, 17 and 24 years, respectively in GWSI, GWTI and GWCI areas over myopic (or uncontrolled) extraction. The additional net present value of benefit realized is US$822, US$1,907 and US$3,636 by optimal extraction in the three well areas. GWCI farmers realized the highest net returns (US$255) per hectare of gross groundwater irrigated area followed by GWTI (US$227.5) and GWSI (US$162.5). In GWTI (GWCI) amortized cost per cubic metre of groundwater was lower by 33% (53%) compared with GWSI, which reflects positive externality owing to the synergistic role of canals and tanks in groundwater recharge.