Spilling over: The benefits of public works projects for groundwater in India

Depletion of groundwater is a major challenge in India. We examine how a major rural public works program (MNREGA) that financed the construction of surface water infrastructure may have plausibly increased aquifer recharge rates and impacted groundwater levels. Using a difference-in-differences approach on the staggered and heterogeneous roll-out of MNREGA, we show that groundwater levels increased after its implementation. These increases were concentrated in states that constructed the largest number of MNREGA-financed surface water projects. The increases we observe in groundwater appear to have led to increases in the irrigated area of high value crops and greater overall irrigation during the dry season.