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Using MODFLOW 2005, this study numerically evaluated the effects of managed aquifer recharge ( MAR) using treated wastewater ( TWW) in managing the Al-Khawd coastal aquifer northeast of Oman. Our primary objective is to increase the urban water supply and to sustain the aquifer service with the lowest possible damage to the aquifer. A number of managerial scenarios were simulated and progressively developed to reduce seawater intrusion and outflow of the groundwater to the sea. An economic analysis was conducted to characterize the trade-off between the benefits of MAR and seawater inflow to the aquifer under increased abstraction for domestic supply. The results show that by managing irrigation wells and relocating public wells in conjunction with MAR practices, the abstracted volume for drinking purposes could be doubled. Even though injection of TWW is more expensive ( due to the injection cost), it was observed to result in greater benefits. The results indicate that managing the aquifer would produce a net benefit ranging from $8.22 million ( scenario 7) to $15.21 million ( scenario 4) compared to $1.57 million with the current practice. In conclusion, MAR using TWW is a feasible solution to develop water resources in arid regions, and the best scenario depends on the decision maker’s preference when weighing the benefits of MAR and the level of damage to the aquifer. MAR could help manage stressed aquifer systems in arid zones to maximize the benefit of using the water for domestic purposes while minimizing the damage to the aquifer.