The seven states fighting over a shrinking river are in deadlock, but the solutions to water independence already exist. Cities and utilities don’t need to wait for federal bailouts, and the technology is cheaper than what they are paying now.
The annual Colorado River conference recently wrapped and the takeaway is a depressingly familiar deadlock. Seven players, the same battle scars, and the same entrenched positions continue to prevent critical progress.
- The Upper Basin states—Colorado, New Mexico, Utah and Wyoming—won’t commit to cuts.
- The Lower Basin states—Nevada, Arizona, California—are pushing for 1.5 million acre-feet of cuts, but it isn’t enough.
- Lake Powell and Lake Mead—the two largest reservoirs on the Colorado—are only 28% to 37% full.
- Colorado’s snowpack has hit record lows across the state this winter. On 6 January, 100% of California was classified as free of drought conditions for the first time in 25 years.
The uncomfortable truth? The river can no longer support 40 million people and 5.5 million acres of farmland, as flows have reduced from an average of 18 million acre-feet to around 12.5 million acre-feet and are trending lower. The 1922 Colorado River Compact, based on data from a uniquely wet period, was flawed then and is catastrophically wrong now.
So, let’s stop fighting over a diminishing asset and build something better. This is an opportunity to rethink infrastructure and create countless jobs.
Where Does All the Water Go?
A notable 2024 study published in Communications Earth & Environment provides a full water budget for the Colorado River Basin:
- Agriculture: 52%—Irrigated crops consume more than half of the river
- Natural vegetation: 19%—Riparian and wetland evapotranspiration
- Municipal, commercial & industrial: 18%—Cities, businesses, industry
- Reservoir evaporation: 11%—Water lost from Lake Mead, Lake Powell, and other storage
The Real Leverage Point: Agriculture
Cattle-feed crops—alfalfa and other hay—alone consume 32% of the entire river. That’s nearly a third of all Colorado River water going to feed cows.
In the Upper Basin, cattle-feed crops drink 90% of all irrigation water—three times more than cities, commercial users, and industries across the entire basin combined. Put differently, alfalfa consumes more Colorado River water than Los Angeles, Las Vegas, Phoenix, Denver, and every other city and business in the basin, combined.
The seven-state negotiation focuses on municipal allocations and mandatory cuts—but cities only use 18% of the river. The structural problem is agricultural, and specifically, low-value, water-intensive crops grown with nearly free federal water. According to a December 2024 UCLA/NRDC analysis, municipal districts pay an average of US$512 per acre-foot for Colorado River water. Agricultural districts pay just US$30—and nearly a quarter of agricultural diversions cost nothing at all.
The path forward isn’t fighting over the 18%. It’s building water independence for cities while the economics of agricultural water use get rationalized—whether through market pricing, fallowing programs, or crop transitions.
Solutions Already in Action
Las Vegas, Nevada sits in the Mojave Desert and despite the having the smallest allocation of any basin state (300,000 acre-feet), it has added 750,000 residents in two decades while reducing total water consumption by 48%. How? Nevada recycles 85% of its wastewater, the highest rate among basin states. Arizona is second at 52%. The Upper Basin states average less than 5%.
Southern Nevada’s secret weapon is the return-flow credit system. Every gallon of treated wastewater returned to Lake Mead via the Las Vegas Wash earns a credit to withdraw another gallon. The result: Nevada effectively stretches its 300,000-acre-foot allocation to over 465,000 acre-feet. The Southern Nevada Water Authority claims 99% recycling of all indoor water use—making it one of the most water-efficient metropolitan areas on the planet.
Orange County, CA is sixty miles from where state negotiators have traded barbs, operates the world’s largest water recycling facility. The Groundwater Replenishment System produces 130 million gallons of purified drinking water daily—enough for one million residents. It recycles 100% of reclaimable wastewater. The water meets all federal drinking water standards and costs less than importing water from the Colorado River. This isn’t a pilot. It’s been running since 2008 and just completed its third expansion.
Los Angeles, CA is following suit with Pure Water LA, a US$6 billion program to recycle 100% of the city’s wastewater by 2035. When complete, it will produce up to 230 million gallons per day—roughly one-third of LA’s drinking water needs.
Policy and Funding Gaps
Only 7% of Bureau of Reclamation conservation funding goes to water reuse—and California captures 80% of that. Upper Basin states receive just 4%, and tribal areas receive nothing. While the Trump administration has set a February 14th deadline for states to reach a deal, it has otherwise stayed hands-off. To date, there is no confirmed Bureau of Reclamation commissioner, and federal bailouts like the US$1 billion that bought temporary cuts in 2023 aren’t coming back in an era of spending cuts.
California’s statewide target of 1.49 million acre-feet of recycled water by 2040 points to a path forward. For water infrastructure investors, the buildout in treatment systems, advanced membranes, energy recovery, and distribution networks is a generational opportunity—driven by states and utilities acting in their own interest, not federal leadership.
The Bottom Line
Cynically, Colorado River negotiations will drag on, and may even produce an agreement. But any agreement that depends on an overallocated, climate-stressed river is a temporary fix. The durable solution isn’t dividing a shrinking pie—it’s building water independence, community by community, state by state, using technology that’s proven, cost-competitive, and immune to the politics of the Colorado River Compact.
For water infrastructure investors and utilities evaluating their portfolios, the question isn’t whether water recycling will scale—it’s whether you’ll be building it or buying it from someone who did.
