In many parts of the world, groundwater is being extracted at rates that exceed natural renewal rates, leading many experts to conclude that groundwater irrigation is an unsustainable strategy for rural development. However, since the seminal work of Solow (1974) and others, economists have come to consider sustainability from a broader perspective, which allows for income to be sustained by investing profits from resource depletion in acquired (man-made) capital that can substitute for the resource. In this paper, we examine the extent to which the withdrawals of groundwater for irrigation in India have resulted in household-level investments in physical and human capital. Our empirical strategy compares villages in the same administrative units that overlie aquifers with different water storage capacities and, therefore, endowed with different levels of access to the resource. We find that greater access to the resource results in more irrigation, as expected, as well as higher asset wealth and educational attainment. The results suggest that deeming India’s irrigation strategy as unsustainable purely because of the decline in water tables may be too limited, provided that human capital is used to productively shift income from farm to off-farm sources.