Old diversion dam for the water supply for the valley. It's not used any more.
My understanding is that all the water for the valley comes from 3 wells in the valley that is then pumped to the huge green water tank that is near where that shot was taken. If you take the road behind the Happy Isles bathrooms you'll end up at the water tank. The Horse trail goes along the road and then continues past the water tank. It crosses the IllIlouette creek on a couple of bridges. This is also where'd you go if you were wanting to explore getting up the Illilouette gorge.
The water used to be diverted from the Merced River by the dam in the picture. Most of the dam and piping have long ago been removed.
One of the reasons the water tank is so large is so they'll have enough water to fight any large fires in the valley should one occur.