It has become popular to lament how slowly California is embracing water markets. Proponents’ rhetoric can paint markets as an unambiguously better, or even as the only, solution to California’s water challenges. But faith in market efficiency needs to be tempered with a firm grasp of the greater physical and institutional context for water. Markets may be part of the solution, but only where implemented carefully. Take groundwater. In many areas, decades of unfettered pumping have depleted aquifers, resulting in dry wells, deteriorating water quality, depleted streams and infrastructure damage.