GROUNDWATER OVERDEVEWPMENT IS a problem throughout Northern Gujarat. In India, horse­power (hp) based electricity charges encourage inefficient water and energy use in overdeveloped areas. Pumping accounts for 30 percent of electricity consumption in Gujarat and underlies the state's power crisis. The social conditions necessary for farmers to manage groundwater overdevelopment are difficult to meet. User group and resource boundaries are poorly defined, information is not available, private well ownership complicates free rider control, and large heterogeneous groups utilize aquifers. Government regulatory attempts have not been successful. Institutional structures which address groundwater problems need lo be created at the required scale to meet the necessary social conditions, and rectify pumping incentives. Cooperatives have been proposed as a response to the state's electricity crisis. Electricity to village-level organizations should be metered. They can then meter membership consumption. Since pumping is often the primary end use, unit charges should create incentives for electricity and water conservation at organization and end-use levels. As a result, the organizations could provide an appropriate nucleus for water management activities. Defining management entities using the electrical system could address many of the free rider, user group, and information issues complicating emergence of farmer-based groundwater management systems.