<p>Optimal investment in conservation requires balancing the benefits of conservation against its costs. We model the benefit of groundwater, less the cost of conserving groundwater through a subsidy for on-farm surface water storage. On-farm surface water storage reduces arable land but provides a substitute for groundwater used in irrigation. The average social net benefit from conserving water is $12.32 per acre-foot after thirty years with the current subsidy for surface storage, and the aquifer thickness rises by 10.6%. The average social net benefit of groundwater conserved rises by lowering the subsidy, but the volume of conservation also declines. A third of the sites where groundwater is nearly exhausted after thirty years increase surface storage with the subsidy and experience a rebound in groundwater volumes. Conserving groundwater with the subsidy generates the highest net benefit for sites with a high yield for rice, a low yield for dryland soybean, a low depth to the aquifer, and high natural recharge.</p>