projects by increasing the area of irrigated cropland. That would put pressure on groundwater resources and result in declines in groundwater levels relative to the partial equilibrium response.

We examine which of these two effects dominate empirically using a difference-in-differences framework that takes advantage of the sequential roll-out and heterogeneous implementation of MNREGA across the country, coupled with data from more than 20,000 test wells that measure groundwater levels throughout India at multiple times each year from the late 1990s to 2012. We find evidence that suggests that MNREGA did succeed in improving rural, water-related infrastructure. MNREGA implementation appears to have raised groundwater levels (increased groundwater storage) immediately following the monsoon season and through the dry planting season. This is consistent with MNREGA projects improving recharge rates and allowing for more monsoon precipitation to reach and be stored in groundwater reservoirs.

Higher groundwater levels have meaningful consequences for Indian farmers. Total area irrigated increases after the implementation of MNREGA. More tellingly, the area irrigated by wells increases significantly after the implementation of MNREGA. This increase stands in contrast to no observed change in the area irrigated by canals, tanks, or “other sources” of irrigation water. Consistent with more irrigation water being available, we observe increases in the soil moisture level after the implementation of MNREGA. This effect is concentrated during the rabi (dry) season when soil moisture is most determined by irrigation levels. Likely as a consequence of the increased availability of irrigation water, we find that farmers substantially increase their irrigation of highvalue, water intensive crops after the implementation of MNREGA. Overall our results suggest that MNREGA succeeded in improving the water conservation and irrigation infrastructure in states in which it was well-implemented. These improvements led to higher groundwater recharge rates that, in turn, made irrigation water more available for farmers and allowed them to increase irrigated areas and shift into higher value crops.

Our work speaks directly to a number of literatures. There is a large, and growing, body of work on the effectiveness of MNREGA as a policy project.<sup>2</sup> In addition to the commonly examined outcomes (e.g. wage impacts (Imbert and Papp, 2014)) a growing body of work examines the impact of MNREGA on a host of environmental outcomes (e.g. air pollution (Behrer, 2023) and resilience to droughts (Dasgupta, 2017)). We add to that literature by focusing on the impacts of MNREGA on groundwater levels, an issue of specific focus of MNREGA, and of general concern for Indian policymakers. Better managing India’s groundwater and reducing stress on those resources has been a long-term goal of Indian policy (Mukherjee et al., 2015). Much of the existing work examining these efforts has focused on developing strategies to curtail extraction (Ryan and Sudarshan, 2020; Badiani and Jessoe, 2013). We provide evidence of how policy can increase recharge, and subsequently storage, providing another tool to combat declining water levels.

The rest of the paper is as follows. We briefly review the key details of the MNREGA program and the characteristics of India’s groundwater resources in section 2 before describing our data and empirical approach in sections 3 and 4. We present results and discussion in section 5 and then

> 2There are too many papers to list individually here. For a comprehensive review see Sukhtankar (2016).

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