The Observation process is used to compare model-generated values of head, flux, or advective transport with observed values. During model calibration, the goal is to reduce the discrepencies between the two. Many of the input files for the observation process are linked to specific input files for the Groundwater Flow process.
In MODFLOW-NWT, if the head solution from one simulation will be used as starting heads for a subsequent simulation, or if the Observation Process is used (Harbaugh and others, 2000), then HDRY should not be printed to the output file for dry cells (that is, the UPW Package input variable should be set as IPHDRY=0).