Previous studies of groundwater management through \ac{PES} have focused on the isolated effects of the program. We evaluate the interaction of existing groundwater management programs with \ac{PES}, finding that existing conservation efforts can mitigate water conservation. We focus on the application of federal fallowing incentives using \ac{CREP} for farmers in \acl{SLV}, Colorado. Farmers in this environmentally sensitive region had previously self-organized to impose pumping fees that curb groundwater extraction and reduce externalities. These pumping fees are found to be highly effective in reducing groundwater consumption but have a second-order effect of dampening the conservation of \ac{CREP}. Farmers with the largest response to the subdistrict policies self-select into the \ac{CREP} program. Consequently, each well enrolled in \ac{CREP} conserves 62\% less water than would be expected without a pumping fee. Overall, the pumping fees reduce the conservation outcomes of \ac{CREP} by 32\%  while raising program costs by 29.5\%. These outcomes highlight the need to consider interactions between conservation efforts when designing policy. They also suggest that other metrics of success should be considered. \ac{CREP} is effective at compensating the farmers who are the most affected by drought and pumping fees. Furthermore, the program is found to encourage spillover effects, where neighboring wells outside the program cooperatively reduce water usage by 2.8 \ac{AF} per year. The findings provide evidence that the interaction of policy, regional attributes, and community create complexities for \ac{PES} design.
