Targeting Investment in On-farm Surface Water Storage for Groundwater Conservation

Optimal investment in conservation requires balancing the benefits of conservation against its costs. We model the benefit of groundwater, less the cost of conserving groundwater through a subsidy for on-farm surface water storage. On-farm surface water storage reduces arable land but provides a substitute for groundwater used in irrigation. The average social net benefit from conserving water is $12.32 per acre-foot after thirty years with the current subsidy for surface storage, and the aquifer thickness rises by 10.6%. The average social net benefit of groundwater conserved rises by lowering the subsidy, but the volume of conservation also declines. A third of the sites where groundwater is nearly exhausted after thirty years increase surface storage with the subsidy and experience a rebound in groundwater volumes. Conserving groundwater with the subsidy generates the highest net benefit for sites with a high yield for rice, a low yield for dryland soybean, a low depth to the aquifer, and high natural recharge.