The feasibility of groundwater monitoring was investigated by a case study on adopting smart water meters to measure groundwater extraction at individual farms and a centralized online information management system to measure collective aquifer water extraction. Benefits of optimal groundwater management was estimated using hydro-economic models that simulate, for a 70-year period, private and social optimality, taking into account the effects of seawater intrusion on groundwater salinity. A Bayesian inference system was used as an interface between a dynamic programming model and MODFLOW groundwater simulation model. The case study's cost data were scaled-up to the aquifer level and compared to the incremental benefits between private and socially optimal water extraction. The results showed that the Net Present Value of measuring and monitoring groundwater extraction using smart water meters as $790 million ($1332/ha/year) with an Internal Rate of Return of 93%. The sustainable use of the aquifer results to a reduction of the cropped area by 10%, a reduction of the groundwater extraction by 20%, a change in the crop mix, and 42% of the least-efficient farms exiting farming. The exiting farmers could convert farm lands to other land uses such as residential, urban, industrial land use, with adequate facilitation provided by the government. The impact of change of groundwater management strategy on the arid ecology with reduction in tree cover is noted.
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