Artificial recharge of aquifer storage can provide water during drought periods, reverse falling groundwater levels and reduce water losses associated with leakage and evaporation, as compared with surface water storage. We examine the technical and economic potential of artificial storage and recovery for drought mitigation in the Murrumbidgee Region of New South Wales, Australia. Potential locations for infiltration basins and injection/recovery wells are identified according to criteria such as water availability, aquifer suitability, recharge potential, and potential to provide a usable resource. The estimated annual artificial recharge potential is 180,000 ML through a combination of injection wells and infiltration basins. The cost estimates for artificial recharge vary from AU$ 62 ML'1 to AU$ 174 ML'1 depending on the choice of recharge method. Underground storage capacity can be developed at less than half the cost of surface storage facilities without undesirable environmental consequences or evaporation losses. The estimated benefits of artificial storage and recovery through infiltration basins are three to seven times the costs, during low allocation years.