Severe drought conditions have been occurring more frequently over the last two decades. In 2001 and 2002, under the authority of the Flint River Drought Protection Act (FRDPA), Georgia’s EPD conducted irrigation reduction auctions to buy permits from farmers for the year to conserve freshwater resources, but only targeted surface water permits. Changes to the FRDPA allow for groundwater permit holders to participate in future auctions. This paper evaluates the efficiency of the alternative mechanism, the Flow-Impact Offer (FIO), that utilizes permit-specific aquifer flux ratios to adjust bids from groundwater permits relative to surface water bids. Assessment criteria include water purchased, acres taken out of production, average price paid per acre-inch of water saved, and regional economic impacts. Results indicate using an FIO significantly increases the amount of water saved at a lower average cost per acre inch ($/ac-in), while limiting regional economic losses due to reduced agricultural activity.