["Australian Journal of Agricultural and Resource Economics, EarlyView. ", "\nABSTRACT\nGiven increases in climate change and surface water overallocation pressures in the future, groundwater will play an increasingly important role for water supply. This requires greater investment in water security, with the nature‐based water management tool of managed aquifer recharge (MAR) a cost‐effective alternative to more conventional choices such as dams or desalination. While MAR is a mature and safe technology that has been used for decades around the world, currently there is a lack of private and public sector investment in MAR in Australia. The main barriers to MAR implementation are not hydrogeological, but legislation and policy. Our study investigates MAR policy issues further by undertaking a thematic legislative analysis of 252 Australian state and territory water and environmental legislation and policy documents and conducting a focus group/interview discussion with state/territory MAR policy experts (n = 18). The legislative review finds that Australian MAR legislation is highly complex, providing no ownership of recovery water nor security from government opportunism, and leads to high regulatory costs, disincentivising private sector investment. The study concludes by providing targeted recommendations to reduce implementation barriers and regulatory and transaction costs through reducing regulatory risk, strengthening property rights, improving regulatory processes and providing better education and guidance.\n"]