Intense sand mining has two vital influences on groundwater: First, it inhibits the riverbed's ability to hold groundwater and secondly it reduces the recharge of water to open wells, ponds and tanks within proximity. Thus sand mining reduces the availability of groundwater. Next, the industrial effluents in such areas exacerbate the predicament as they affect the groundwater quality. This has affected agriculture, health and environment resulting in inefficiency and welfare loss to the rural communities. This book provides a theoretical and an empirical analysis of sand mining and distillery effluent impacts on groundwater use and possible solutions for internalisation of negative externalities focusing on North Pinakini River basin of Karnataka, India. The analysis provide useful insights to the policy makers towards framing effective institutions to regulate the activities of both sand miners and distillery effluent polluters and save the precious groundwater resource from depletion and degradation.