Historically, the Colorado River Basin swung between flood years and more extended periods of drought. Massive reservoirs like Lake Powell and Lake Mead provided a water-supply buffer for dry years and insurance against damaging floods in wet years.

Since 2000, however, an unprecedented drought has gripped the Colorado River and severely depleted the water stored in its massive reservoirs. The seven Basin states and Mexico have knitted together a series of basinwide and binational agreements to conserve water and manage drought, but those have proved inadequate. As drought has deepened, tensions have grown.

BACKGROUND

In 2003, as the so-called Millennium Drought deepened, representatives of the seven basin states — California, Arizona, Nevada, New Mexico, Colorado, Utah and Wyoming — began meeting to discuss possible strategies for collectively weathering the drought. In essence, the effort was an attempt to stretch water supplies as far as possible by slowing the decline of the river’s two main reservoirs, Lake Powell and Lake Mead, and keeping them from hitting “dead pool” — the point at which reservoir levels are so low that water can no longer be released downstream.

Formal negotiations began in 2005 and the resulting agreement, signed in 2007, was called the Interim Guidelines for Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead.

The interim guidelines fine-tuned the interaction between lakes Powell and Mead, partly in an effort to sustain the ability to generate hydroelectric power at Glen Canyon and Hoover dams. If the water level in either Lake Powell or Lake Mead drops too low, the dams will no longer be able to generate hydropower, which is a significant source of relatively inexpensive electricity in the desert Southwest.

The interim guidelines also established tiered shortages for Arizona and Nevada to help those states stave off more drastic involuntary cuts. At the time, the three Lower Basin states — California, Nevada and Arizona — were already using their full Colorado River entitlements, while the Upper Basin states were not. Because California has a senior priority within the Lower Basin, Arizona and Nevada must take cuts before it does.

Under terms of the interim guidelines, the first shortage in the Lower Basin – and the first water delivery cuts – occurs if Lake Mead’s elevation drops to 1,075 feet. Additional cuts come when the lake’s elevation falls to 1,050 feet and again at 1,025 feet. Thus, Arizona’s annual water apportionment of 2.8 million acre-feet would be decreased by 320,000 acre-feet (about 11 percent) at the first tier of cuts, then by another 80,000 acre-feet at the next tier, and finally by another 80,000 acre-feet at the third tier of cuts.

Nevada’s apportionment of 300,000 acre-feet would be cut by 13,000 acre-feet (about 3.7 percent) at the first tier, then by another 4,000 acre-feet at the second tier, and finally by another 3,000 acre-feet at the third tier if the reservoir drops below 1,025 feet.

In any of these scenarios, California would receive its full 4.4 million acre-feet during a Lower Basin shortage but could not take delivery of any water it had previously conserved and saved in Lake Mead.

The guidelines also created a framework under which the Lower Basin states could conserve water and “bank” it in Lake Mead. Formally known as Intentionally Created Surplus (ICS), the concept would grow to become a major component of drought-management efforts on the Colorado River. It allows Lower Basin entities to create credits through water-conservation measures, such as temporarily fallowing land or lining dirt canals with concrete to reduce leakage, and then take delivery of the conserved water from Lake Mead at a future date. Banking ICS water in Lake Mead also keeps the lake’s elevation higher and forestalls the need to declare a shortage and curtail water deliveries in the Lower Basin. Several subsequent agreements with Mexico allow it to participate in the ICS program, as well.

Still, the interim guidelines proved unable to keep pace with the deepening drought and the Colorado River states began a new round of negotiations in 2013. In 2019, the states reached agreement on a pair of Drought Contingency Plans — one for the Upper Basin and one for the Lower Basin — which essentially serve as an additional overlay to the interim guidelines. The new package of agreements included deeper mandatory cuts for Arizona and Nevada, as well as voluntary reductions for California, and made allowances for expanded use of various types of ICS. It also set up a framework for using water from smaller upstream reservoirs to boost levels in Lake Powell and gave the Upper Basin states the ability to test out their own equivalent of the ICS program in Lake Powell, as well.

Under the 2019 Drought Contingency Plans and binational agreements with Mexico, Lower Basin states and Mexico can make water-saving contributions to Lake Mead when its elevation is projected to fall to certain levels. This was first implemented in 2020, with 200,000 acre-feet being left in Lake Mead by Nevada and Arizona and 41,000 acre-feet being left in Lake Mead by Mexico.

The effort to conserve and bank water was given a major boost with some $3.3 billion in funding from the Infrastructure Investment and Jobs Act, passed in 2021, and the Inflation Reduction Act, passed the following year. Water banked through ICS and similar conservation efforts has become a major part of the total amount of water stored in lakes Mead and Powell: By 2023, for instance, ICS water made up nearly 40 percent of the water stored in Lake Mead.

The interim guidelines and drought contingency plans helped stave off a shortage for nearly a decade and a half. But in August 2021, the first-ever shortage declaration was triggered, requiring Arizona, Nevada and Mexico to reduce their take of the river in 2022. Since then, Arizona has taken between 512,000 and 592,000 acre-feet in shortages annually, while Nevada has taken shortages of between 21,000 and 25,000 acre-feet; Mexico also has taken cuts. California voluntarily reduced its annual water use and Arizona and Nevada have made additional voluntary reductions, as well.

CURRENT CONTROVERSIES AND CHALLENGES

Because the entire package of drought-management agreements expires in late 2026, the seven states have again been trying to negotiate a follow-on agreement since 2021. But the effort touched off fierce disagreement between the Upper and Lower Basin about how to allocate the deep water cuts needed to bring the reservoir system into balance, and negotiations broke down before the states reached a federally mandated deadline in early 2026.

LOOKING AHEAD

After the seven Basin states missed a February 2026 deadline to develop a consensus-based proposal for a long-term operating plan, Interior secretary Doug Burgum indicated that he would impose a federal plan for reservoir operations. While the possibility of a shorter-term deal may buy the states breathing room to negotiate a longer-term strategy, there is a significant risk that one or more states could file a legal challenge to the Colorado River Compact itself, which would automatically go before the U.S. Supreme Court and could take years to resolve.

Updated: June 2026.