Institutions and the Economic Efficiency of Managed Aquifer Recharge as a Mitigation Strategy Against Drought Impacts on Irrigated Agriculture in California

Managed aquifer recharge (or intentional recharge) is a purposeful human intervention designed to supplement natural enrichment processes of groundwater aquifers by various methods. It holds the potential to mitigate the impact of climate uncertainty on irrigated agriculture by restoring storage levels in depleted aquifers, the economic value of which increases during droughts. We use a high-resolution dynamic regional hydroeconomic framework that endogenizes farming decisions in response to water quantity-quality changes, as well as complex hydrogeological principles to analyze several institutional designs and climate scenarios applied to the Kings Groundwater Basin in California. Our analysis demonstrates that intentional recharge is of high benefit to the region, potentially increasing average groundwater levels in the region by 20% over a 20 year horizon. Additionally, we show how this practice could become the subject of second-best arrangements among water users in the region in view of property rights to groundwater derived from recent legislation in California, thus increasing its materialization potential. However, we also find that the quantity recharged is sensitive to climate conditions and hydrological properties.