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    You are at:Home » Colorado River Compact: What’s at Stake for Southern Colorado

    Colorado River Compact: What’s at Stake for Southern Colorado

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    By Jeanne Davant on January 5, 2026 Business Insights
    Lake Powell Reservoir on the Colorado River in Northern Arizona State, United States. Popular Vacation Destination.

    Negotiations on new operating guidelines for Lakes Powell and Mead will impact Southeastern Colorado’s water supply. At stake is the water supplying Colorado Springs, which is diverted over the mountains. Although the negotiations do not directly affect Southern Colorado communities in the Arkansas River Basin, there is a trickle-down effect on them as well.

    The Lifeline of the Southwest

    The Colorado River begins as a tiny stream in Rocky Mountain National Park’s La Poudre Pass and meanders for 1,450 miles through seven states, the Grand Canyon and into Mexico. Historically the river drained into the Gulf of California, but because of drought and diversion of water along its course, the riverbed and delta at the terminus are mostly dry.

    Known as the “Lifeline of the Southwest,” the river is dammed, drained and diverted to supply drinking water for 40 million people and irrigation for 5.5 million acres of farmland, according to the Colorado Water Conservation Board. Hydropower from the Hoover Dam, which formed Lake Mead, and Glen Canyon Dam, which created Lake Powell, supplies millions of people. Millions more enjoy recreational pursuits that contribute to local economies. The severe drought that is affecting 57% percent of the Colorado River watershed threatens those uses. According to the U.S. Bureau of Reclamation, water levels in Lakes Powell and Mead, the largest U.S. reservoirs, are approaching record lows. Lake Powell is at 29% of its capacity and Lake Mead is at 32%. A mild, dry winter and low runoff in the spring could exacerbate the drought effects.

    Negotiations Stalled

    These factors are weighing upon negotiators from the seven watershed states, who missed the Nov. 11 deadline to reach a new agreement on operating guidelines for Lakes Mead and Powell.

    The seven states are subscribers to the Colorado River Compact, which specifies how water from the river is allocated among them. States in the Upper Basin — Colorado, Wyoming, Utah and New Mexico — are required to ensure that the Lower Basin states — Arizona, Nevada and California — receive their fair share, since the upper states get the bulk of the snowpack that feeds the river.

    Bureau of Reclamation guidelines set in 2007 will control reservoir management until October 2026. The federal government charged the basin states with formulating their own agreement, but after two years of talks the negotiators failed to reach consensus by the November deadline. Enough progress had been made that federal officials agreed to extend the deadline until mid-February 2026. If a new plan isn’t hammered out by then, the Interior Department could step in and take control.

    According to an Oct. 30 Water Education Colorado post in collaboration with The Colorado Sun’s writer Shannon Mullane, a major sticking point is the extent to which each group of states will commit to water cuts and conservation goals, and whether they should be mandatory or voluntary.

    Another major dispute involves how and when the Upper Basin states must release water to the Lower Basin at Glen Canyon Dam.

    The Upper Basin’s position is that water going into Lake Powell is consistently less than what is going out, meaning that the Lower Basin is using more than its share, and that the Lower Basin negotiators are not accounting for evaporation losses in Lake Powell in their calculations, says Abbey Ortega, general manager of infrastructure and resource planning for Colorado Springs Utilities.

    Becky Mitchell, Colorado’s Upper Basin commissioner, is seeking to prevent attempts to impose additional cuts on the Upper Basin states. Water was released from federally operated reservoirs in the Upper Basin, including Blue Mesa in Colorado, but Ortega says the Lower Basin used that water instead of leaving it in Lake Powell to boost water levels.

    Why the Outcome Matters

    Blue Mesa Dam

    The talks are critical for Colorado Springs, Ortega says. Half of the city’s water comes from the Colorado River basin through diversions that cross the Continental Divide.

    “Because transbasin water can be reused, the value of those supplies is multiplied,” she says. Including reuse, Colorado Springs sources 60-70% of its water from the Colorado River Basin.

    When the availability of Colorado River water is threatened, growing urban areas that rely on it must seek water from other sources.  They often eye the Arkansas Valley and Southeastern Colorado to develop new water supplies through agricultural water sharing mechanisms.

    In 2024, the city of Aurora finalized an $80.4 million purchase of 4,800 acres of farmland in Otero County and its associated water rights. The deal allows Aurora to divert agricultural water periodically — three years out of every 10 — and lease it back in the remaining years for agricultural use. The deal is facing ongoing legal and political challenges from organizations including the Southeastern Colorado Water Conservancy District and Lower Arkansas Water Conservancy District.

    Colorado Springs Utilities opposed the Aurora deal, but “the development of Arkansas River Basin supplies through agricultural partnerships” is among the ways its 2017 Integrated Water Resource Plan addresses risks to Colorado River supplies, Ortega says. These water-sharing agreements typically are 3-in-10-year leases rather than purchases and often involve installing more efficient irrigation systems. Expanded storage, enhanced reuse mechanisms and conservation efforts also help shore up water supplies.

    “Customers have reduced their per capita water use by 44% since 2001 and embraced water-wise landscaping,” Ortega says. “Together, conservation efforts and strategic planning will help Colorado Springs manage its valuable Colorado River resources amid ongoing challenges and negotiations.”

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