Research in North‐East Bihar shows public sector irrigation management to be embodied within the prevailing cultural structures of the region, involving the intrusion of local exchange behaviour into the practices of public allocation of water. With irrigation officials in strong rent‐seeking positions over farmers, and without resort to a moral sense of community through which farmers might exert voice over official providers, opting out into private provision via tube‐well borings and pumpsets has become the exit solution. However, the propensity to make even relatively small investments in bamboo borings is dependent upon access to pumpsets. While élite families own the pumpsets in a village, some farmers may have borings on just some of their land, and others may have no borings of their own at all. Farmers therefore have to enter into multi‐layered transactions in order to secure access to timely water. Secure access to other inputs is also necessary. This study encapsulates the themes of: state versus common property resources management; the ‘incentives’ induced by costs of loyalty and the availability of exits to adopt private solutions; and the social embeddedness of behaviour when operating in interlocked, community level markets.