Market integration directs resources toward higher-value uses, but the resulting spatial reallocation of economic activity can generate local spillovers. Communities may anticipate these spillovers and exert protectionist local control over trade. We study the integration of the world's largest water market to measure local spillovers, estimate communities' value for local production, and quantify how community control would limit trade. We find that a 10% decrease in local irrigation reduces household incomes by 3%, agricultural employment by 7%, and population by 5%. We use a dynamic residential choice model to estimate that median community willingness to pay for the local benefits of irrigation is AUD $119 per megaliter (ML), with 16% of community valuations above the average market price of $235/ML. We combine these estimates with farmer gains from trade to show how information, targeting, and the surplus available for compensation shape the effect of community control on trade. When community values are privately known and transacting farmers must secure community consent through compensation, only 62% of trades that increase farmer surplus proceed. Uniform compensation fails to target heterogeneous values and further limits trade.