by 
The Curious Bag
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Since the federal government began regulating engine modification, enthusiasts have had to become much more creative in finding a means to emissions legal power. Underdrive pulleys are one such 50-state legal mod and are a proven power producer.
Parasitic Drag
All of the belt-run accessories on your engine draw power from the crankshaft to function. Power losses incurred by driving the water pump, alternator and power steering are known as "parasitic drag."
Underdriving
Since many engine accessories are designed to be fully functioning at 1,500, any additional force imparted to them is wasted. Slowing these accessories is a proven way to reduce parasitic drag across the board.
Underdrive Components
Under-drive kits include a smaller pulley for the crankshaft, larger pulleys for all of the accessories and a new belt.
Underdrive Priority
If you cannot or do not want to replace the crankshaft pulley, replacing your water pump pulley with a larger one will net the cheapest and easiest gain. In some cases, high RPM cooling woes can be remedied by underdriving, since slowing the pump will help to prevent high-speed cavitation.
Caution
Be careful not to underdrive your system too much. Excess under-driving can be recognized by a marked increase in engine temperature and a decrease in alternator voltage.
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Resource:
Video: Dyno Testing Underdrive Pulleys
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