Abstract

Wet years are supposed to be good years for hydropower. This paper shows that they are less so where the ground is sinking. Groundwater pumping causes land subsidence: a gradual and largely irreversible collapse of the land surface that can deform the storage and conveyance assets linking rainfall to turbines. We study whether this depreciation of water infrastructure weakens the conversion of precipitation into low-carbon electricity. We link monthly generation from California hydropower plants to cumulative land subsidence, precipitation, and climate conditions measured in the watershed of each plant’s matched dam. The same rainfall produces substantially less electricity at plants whose dams are located in more subsidence-exposed watersheds. The effect is most precisely estimated for run-of-river and diversion facilities, which depend directly on contemporaneous flow, whereas impoundment plants show their largest decline only during extremely wet months. Mechanism evidence points to reduced water-system flexibility: exposed reservoirs hold lower minimum storage, fluctuate more within months, and linked river gauges show weaker sustained and low-flow conditions. Downstream electricity-market responses suggest that the missing hydropower is partly replaced by natural-gas generation, raising nodal prices, congestion, and emissions. The results identify a previously unmeasured cross-sector externality: groundwater extraction reduces the productivity of precipitation for clean electricity generation, imposing costs on the power system that groundwater policy does not currently price.