Colorado's most limited and precious natural resource is water. Colorado water law, which is under the appropriation doctrine, is complex-with its own regulations, law enforcement and court system. There are seven major water basins in Colorado with seven district water courts. The appropriation doctrine was created in 19th century mining camps and envelops several interrelated concepts. The major ones are (1) a water right is a right to use of the water, (2) the right is acquired by appropriation and (3) an appropriation is the act of diverting water from its source and putting it to beneficial use. Under Colorado law the person that diverted water from a stream and used the water first has priority rights to that water above subsequent users. The phrase: "first in time, first in right" or "prior appropriation" applies. The first person who used the water and put it to a "beneficial use", such as mining, industrial, municipal or irrigation, received the right to use that specific allocation of water each year. The second person to do the same thing also received an allocation, but his rights are "junior" to the first allocation. Water can be used only after the owners of those senior rights get all the water they are entitled to.

The rights to use water are in fact property rights and are in place on every river and stream in Colorado. These rights can be inherited, bought and sold. Every year people's rights to use water "in priority" (in order of most senior to most junior rights) is strictly enforced by the Colorado Division of Water Resources. Most river basins are over-appropriated, which means there are more water rights than there is water to supply all the allocations on the river basin. The most senior rights on most Colorado streams have appropriation dates from the 1860's to the 1890's. Most rivers and streams were over appropriated by the 1930's. Which means little or no new water is available for use in priority during dry summer months, and new junior rights often are unable to obtain any water.

Wells throughout Colorado were generally dug and put to use after surface water rights of streams were filed on. The ground water which the wells pump is considered tributary to the stream system (which means their use depletes the streamflow of the basin they are in), therefore wells typically are junior in priority to the senior surface rights holders. In order to use a junior water right without injuring the senior right holder, the junior right holder must replace to the stream the amount of water depleted by the junior right. This replacement process is called augmentation. Recently several hundred irrigation wells have been shut down by the Division of Water Resources because they were not properly augmented. There are wells in Colorado that are considered non-tributary wells and in theory do not deplete the streamflow. These wells do not require augmentation which makes them more desirable than tributary wells.

With the growth of the population and increased demands on water for municipal uses, water rights of each basin naturally become more valuable. Orr Land Company has completed several hundred water transactions and can help you understand the process and intricacies of water transactions, as well as determining market values. This limited supply of water rights will undoubtedly continue to appreciate in value as Colorado continues to grow and water will remain the new gold of Colorado.