Despite the growing importance of groundwater in Chinese agriculture, there is a lamentable lack of systematic information on the groundwater economy, especially on the agricultural consequences of groundwater depletion. This paper makes an attempt to overcome this limitation with information and analysis on trends in the expansion of agricultural groundwater use, resource management challenges, and institutional and policy responses in the particular context of northern China. The results show that groundwater problems and their agricultural consequences in northern China are heterogeneous across space and changing rapidly over time. While the problems are serious, they do not present everywhere with the same severity. As result, policies for their solution should be clearly discriminatory and carefully targeted. Even targeted policies will be difficult to implement, and government has had little success in controlling the extraction of groundwater or protecting its quality with the many formal laws and regulations now in existence. In contrast, farmers have been responsive to increasing shortages. Individual farmers (i.e. the private sector) have taken control of most well and pump assets, developed groundwater markets, changed cropping patterns and adopted water savings technologies. While market forces and economic incentives can change use, public initiatives for agricultural groundwater regulation to balance short term economic efficiency with long resource sustainability are urgently needed.

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