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Water Rights FAQ

Updated: Jan 8


photograph of a river running through a green forest with mountains in the background with text overlay "Water Rights FAQ"

What are water rights?


Water rights refer to the legal entitlement to use water from a particular source. Water rights pertain to the legal rights of property owners to access and use water sources on or adjacent to their land.


In the United States, water rights are typically allocated by state governments and are based on a "first in time, first in right" principle. This means that the person or entity that first established a claim to the water source has the most senior water right, and is entitled to use the water before anyone else. Some states follow the 'riparian doctrine,' which limits water use to the owner of the land where the water source is located.

Why are water rights different across the United States?


Water rights are different across the United States because water law is primarily a matter of state law. Each state has its own system for allocating water rights, which can vary significantly in terms of how water is allocated, who is eligible to hold the rights, and how water is managed during times of scarcity. Some states, like California and Colorado, have complex systems of water rights that take into account factors like the seniority of the water right, the purpose of use, and the amount of water available. Other states, like New Hampshire, have relatively simple water allocation systems that are based on the common law principle of riparian rights, which gives landowners adjacent to a water source the right to use that water as long as they don't harm other users.

What are general lease terms for water rights?


Typical Amount of Water Required: The amount of water that you can trade is heavily dependent on the location and regulations on the resource. As with most resources, the larger amount you have, the more interest in your listing we receive. Typical Timeframe Required: Water can be leased on a seasonal or long-term basis depending on the regulatory environment in your specific area.

What are the different types of water rights and water laws?

  1. Riparian rights: This is a common law principle that gives landowners adjacent to a water source the right to use that water as long as they don't harm other users.

  2. Prior appropriation: This is a water allocation system that is based on a "first in time, first in right" principle. The person or entity that first established a claim to the water source has the most senior water right and is entitled to use the water before anyone else.

  3. Groundwater rights: Groundwater is regulated differently than surface water, and some states have different systems for allocating groundwater rights. In some states, landowners have the right to use the groundwater beneath their property, while in others, groundwater is considered a public resource that is subject to state allocation.

  4. Water permits: In some states, individuals or entities must obtain a permit from the state before using water for certain purposes, such as irrigation, industrial processes, or municipal water supply. These permits may have conditions or restrictions on the use of the water.

  5. Water conservation laws: Some states have laws or regulations that require water users to conserve water, reduce waste, or use water-efficient technologies.

  6. Water quality laws: The Clean Water Act is a federal law that regulates water quality in the United States. States may also have their own water quality laws or regulations.

  7. Interstate water compacts: When water crosses state lines, it can be subject to an interstate water compact, which is a legal agreement between two or more states that governs the use and management of the water.

Who leases water rights?


Landowners can lease their water rights to others who need water for various purposes, such as irrigation, industrial processes, or municipal water supply. This can be a way for landowners to generate additional income from their property. The terms of a water lease will vary depending on the specific situation, but generally, the lease agreement will outline the amount of water being leased, the duration of the lease, and any conditions or restrictions on the use of the water.


How are water rights valued?


Not all water rights are created equally, and the value of a water right is specific to the type and characteristics of the water source. Factors that affect the value of water rights include historical consumptive use, reliability, location, marketability, and storage rights. Similar to determining the value of land, water rights are commonly valued using a sales comparison approach. The best way to determine the value of water rights is to enter those rights into a competitive marketplace to see what buyers are willing to pay.

If you are curious about different basins and how they affect different states, check out these links:




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