Water rights are among the more complicated issues in civil (as opposed to criminal) law in the United States as well as in in many other countries divided between humid and arid zones and in all countries where groundwater is a major source of drinking, agricultural, or industrial water. As I am not a lawyer, I cannot pretend to understand all of the legal ramifications, but water law and the rights to the use of water which the law establishes are crucial matters in national and especially in state and local politics in the United States and many other countries, including the larger English-speaking countries Australia and Canada.
The rights to use water in the western United States are appropriative and relate to the actual use of the water and the length of time that use has been ongoing. Large areas of land west of the 100th Meridian (pace John Wesley Powell, Wallace Stegner, and Walter Prescott Webb) are essentially useless, for no perennial streams cross them and the rainfall is inadequate for crops, and in some instances even for occasional grazing. Only with access to water is the land useful, and governance of that water has been a key theme in the development of states of the western Great Plains and in the intermontane west. As a general rule, the first users to claim water from a stream had long term rights to the use of that water. Under this appropriative doctrine common in states of the western United States, water rights continue to be granted until rights to all of the water in a stream have been granted. Those rights presuppose the actual consumption of the water so that it is not returned to the stream. Even landowners next to a river or smaller stream may have no rights to use it if all of the water has been appropriated, a situation quite different from that in eastern states where riparian rights prevail and anyone owning land along a stream has rights to the use of the water in the stream. In humid areas the use is assumed generally not to be consumptive, and water used is returned to the stream so the downstream flow is undiminished. Of course, the situation in reality is never quite as simple as the law might suggest, and disputes over water rights are common on the dockets of the Federal courts and those of civil courts in the various states.
New Mexico provides a good example of the complexities of water law in a western state, one where appropriative rights are paramount. Water rights are a crucial matter when agricultural land is sold, and there is fierce competition for available water supplies by urban areas. The election for a new governor in November has brought water issues to the fore in a state where drought and population expansion have increased water demands as supply is diminishing. The almost always fascinating blog from Aqua Doc has a good piece on this issue.