The use of surface water to replace groundwater for irrigation is often viewed as an effective approach for reducing groundwater overdraft on an agricultural landscape. However, the availability of surface water does not necessarily lead to groundwater conservation in practice. The expected increase in the aquifer volume in the presence of surface water does not occur unless the off-farm water price is low enough to generate a significant shift away from groundwater. There is a change in the crop pattern toward more irrigation-intensive crops, and the net effect can be a rise in groundwater extraction.

This research analyzes two groundwater conservation policies in the Kansas High Plains located within the Ogallala aquifer: 1) cost-share assistance to increase irrigation efficiency; and 2) incentive payments to convert irrigated crop production to dryland crop production. To compare the cost-effectiveness of these two policies, a dynamic model simulated a representative irrigator's optimal technology choice, crop selection, and irrigation water use over time. The results suggest that the overall water-saving effectiveness can be improved when different policy tools are considered under different conditions. High prevailing crop prices greatly reduce irrigators' incentive to give up irrigation and therefore cause low enrollment and ineffectiveness of the incentive payment program. In areas with low aquifer-saturated thickness, the incentive payment program is more effective, whereas in areas with relatively higher water availability, the cost-share program could be a better choice.