Why It Matters

The Colorado River drought has pushed two of the country's largest reservoirs to near-record lows, and the legal framework holding together water management for 40 million people across the American West is about to expire. What happens next could reshape water policy for decades.

Most of the conservation agreements governing Colorado River Basin water crisis management expire at the end of 2026. The Bureau of Reclamation has five operational alternatives on the table, several of which would require congressional approval.

The Upper and Lower Basin states cannot agree on a path forward. And poor hydrology in 2026 means Lake Powell could reach critically low levels before any new framework is even finalized.

The Big Picture

The Colorado River compact was built on a flawed assumption. When negotiators divided the river in 1922, they calculated average annual flows at 16.4 million acre-feet. Actual flows from 1906 to 2024 averaged only 14.6 million acre-feet. Since 2000, they have averaged just 12.4 million acre-feet. The river was over-allocated from the start, and climate-driven drought has made the math worse every decade since.

The compact split the river evenly, with 7.5 million acre-feet allocated to the Upper Basin states of Colorado, New Mexico, Utah, and Wyoming, and another 7.5 million acre-feet to the Lower Basin states of Arizona, California, and Nevada, plus additional commitments to Mexico. Demand has exceeded supply in most years, draining storage in Lake Powell and Lake Mead, the two largest reservoirs in the country, and the system's primary buffers.

Storage at both reservoirs is now near the lowest levels on record. The Congressional Research Service, in a report updated May 7, 2026, notes that due to poor hydrology this year, Lake Powell has the potential to reach critically low levels. Experts cited in the report estimate that 2.4 to 3.2 million acre-feet per year in reductions are needed just to stabilize the system over the long term.

Previous drought response Colorado River agreements in 2003, 2007, 2019, and 2024 built on one another and gradually reduced water deliveries, but they have not closed the gap. Since 2020, the Bureau of Reclamation has curtailed deliveries to Arizona and Nevada based on Lake Mead levels and has moved water from upstream reservoirs into Lake Powell in 2021, 2022, and again in 2026.

In 2026, Lower Basin states are expected to conserve a total of 1.3 million acre-feet: 533,000 acre-feet in uncompensated reductions and 770,000 acre-feet under the 2024 plan, including federally compensated reductions approved by Congress under the Inflation Reduction Act. Despite those cuts, the CRS report is clear: experts agree that more reductions are still needed.

Colorado River Water Management at a Crossroads

With existing agreements set to expire, the Bureau of Reclamation released a draft Environmental Impact Statement in January 2026, laying out five post-2026 operational alternatives for Lake Powell and Lake Mead. The alternatives range considerably in scope.

The "No Action" alternative would allow for up to 600,000 acre-feet per year in Lower Basin delivery reductions, based on Lake Mead elevation. At the other end of the spectrum, "Maximum Operational Flexibility" would allow reductions of up to 4.0 million acre-feet per year, based on total system storage. The middle options, "Basic Coordination," "Enhanced Coordination," and "Supply Driven," propose varying triggers, distribution methods, and magnitudes of cuts.

The Bureau of Reclamation has stated a preference for a consensus approach among basin states but has also reiterated its willingness to act unilaterally. Several of the alternatives would require congressional approval to implement, meaning this is not solely an executive branch decision.

On May 1, 2026, the Lower Basin states put forward a new 2026–2028 operations proposal. Under that plan, the Lower Basin states would collectively contribute reductions of 1.25 million acre-feet per year, Mexico would contribute 250,000 acre-feet per year, and a new 700,000 acre-feet conservation program funded through a federal and state cost-share would bring total savings to approximately 3.2 million acre-feet through 2028. The proposal does not specify how much new federal funding would be required to implement the conservation program.

The Upper Basin states have opposed the proposal, calling instead for basin-wide consensus and mediation, and have not endorsed the Lower Basin's unilateral approach.

Political Stakes

For the Administration

The Trump administration inherited a draft EIS from the final days of the Biden administration and must now decide which operational alternative to finalize. That decision will govern Colorado River water management for potentially decades and will directly affect agricultural users, municipalities, and tribal communities across seven states.

There is also a funding question with direct political implications. The 2024 conservation plan was partially funded through the Inflation Reduction Act, a Biden-era law the current administration has sought to roll back in various contexts. The new Lower Basin proposal calls for a fresh federal and state cost-share conservation program, but does not specify the federal commitment required. If the administration is unwilling to commit new federal dollars, the conservation program's viability is in question, and with it, the entire Lower Basin proposal.

The Bureau of Reclamation has signaled it will act unilaterally if states cannot reach a consensus. That posture puts the Department of the Interior at the center of one of the most politically sensitive resource decisions in the West, in an election environment where Arizona, Nevada, and California are all directly affected.

For Congress

Several of the draft EIS alternatives cannot be implemented without congressional approval, which means lawmakers cannot simply defer to the executive branch on this one. The Lake Mead Lake Powell drought has already produced one major legislative intervention through the Inflation Reduction Act's drought funding provisions. Another may be required.

The Upper Basin's call for mediation rather than federal imposition aligns with Republican preferences for state autonomy, but the practical urgency of the situation, with reservoir levels near record lows and existing agreements expiring, may override ideological preferences for limited federal involvement.

For the Public

Forty million people across the Southwest depend on Colorado River Basin water. Agricultural users, cities, and tribal communities all face potential delivery reductions under any of the post-2026 alternatives. The Lower Basin proposal's conservation program would be partially funded by taxpayers, and the federal share remains undefined. Whatever framework emerges will determine who bears the cost of a century-old miscalculation now compounded by drought.

The Bottom Line

The Colorado River drought is not a temporary weather event. The CRS report makes clear this is a structural deficit, one built into the 1922 compact and worsening with each passing decade. The expiration of existing conservation agreements at the end of 2026 creates an immediate policy deadline with no easy resolution in sight.

The Lower Basin states have a proposal, while the Upper Basin states want mediation. The Bureau of Reclamation has five alternatives and the legal authority to act alone. Congress may need to weigh in regardless. And the administration must decide how much federal money to commit, and to what framework, without clear guidance from the states it is trying to coordinate.

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