Groundwater overdraft occurs when extraction exceeds both natural and induced aquifer recharge over long periods. While ultimately unsustainable and invariably having detrimental effects, overdrafting aquifers is common and may be temporarily beneficial within a long-term water management strategy. Once a region chooses to end overdrafting, water management must change if increased water scarcity is to be avoided. Integrated water-management models allow aquifers and overdraft to be analyzed as part of a regional water-supply system. Incorporating economics into the model establishes a framework for evaluating the costs and effects of groundwater management actions on the entire system. This economic-engineering approach is applied in a case study of the Tulare Basin in California, USA, where previous economic studies showed optimal pumping depths have been reached. A hydro-economic optimization model is used to study the economic effects and water management actions that accompany ending overdraft. Results show that when overdraft is prohibited, groundwater banking using conjunctive-use infrastructure built between 1990 and 2005 largely annuls the cost of not overdrafting. The integrated economic-engineering approach quantifies effects of groundwater policies on complex regional water-resource systems and suggests promising strategies for reducing the economic costs of ending aquifer overexploitation.