Urban or agricultural development along rivers generally leads to levee construction to avoid flooding and increase the habitable or arable land, but this constricts rivers and reduces floodplain habitat and recharge. Additionally, development in semi-arid regions with droughts increases reliance on groundwater extraction which may result in prolonged losing stream-aquifer systems creating intermittent streams. Thus, further work is needed to identify how aquifer heterogeneity influences the spatial and temporal variability in stream-aquifer exchange. The work herein presents numerical modeling results of a coupled surface water-groundwater model with 100 realizations of a heterogeneous aquifer to quantify the relationship between subsurface channel deposits and stream-aquifer interaction. The positive correlations between the number of coarse stream reaches and stream seepage demonstrate increases in stream-aquifer exchange especially in wet seasons and wet years. This increased stream-aquifer exchange decreases streamflow and leads to earlier channel drying as indicated by negative correlations. Multi-benefit projects such as levee setback and removal may recharge groundwater leading to locally gaining stream reaches while additionally improving the hydrologic conditions for floodplain and riparian ecosystems. We evaluated levee setback distances of 200 m to 3200 m with a hydrogeologic model to assess tradeoffs in groundwater recharge and floodplain inundation. We found larger gains in recharge benefits at 800 – 1400 m setback distances where there was less decline in effective recharge rates and flood depths. Additionally, we simulated stream-aquifer conditions at a floodplain site, with levee removal in 2014, from 2014-2020 with a levee removal scenario (i.e., historical period) and a baseline scenario with no levee removal to quantify stream-aquifer exchange benefits. The stream-aquifer water budgets demonstrated significant increases in floodplain recharge which increased groundwater storage, groundwater evapotranspiration, and stream seepage. These increases do not directly translate to environmental benefits as there is only a slight shift in dry season streamflows, but there were large increases in the spatial extent of groundwater dependent ecosystem evapotranspiration. The findings suggest that long-term floodplain recharge increases may elevate groundwater elevations and enable the baseflow to increase streamflow into the dry season to provide aquatic ecosystem habitat.