Colorado Water Law: An Overview
In Colorado, water rights are treated as real property interests that are severable from the land. One can own water rights in surface water (rivers and streams), ground water (wells) and storage water (reservoirs and ponds). A water right is acquired by diverting water and placing it to beneficial use. Colorado follows the prior appropriation or “first in time, first in right" doctrine, whereby senior water rights must be fully satisfied before more junior water rights are allowed to be used. In circumstances where the senior rights are not being fully satisfied, state water officials may curtail or “call out" usage by the junior water users until the senior water rights are fully satisfied. State water officials (i.e., Water Commissioners) are responsible for administering such “calls" on the system.
A water user can use junior water rights “out of priority" without being subject to a “call" by obtaining a decreed plan for augmentation. The augmentation plan will allow such out-of-priority usage only if the amount that is consumptively used (the “depletion") is replaced (“augmented") in time, place and amount, so as to prevent injury to other water rights. 
The policy underlying the prior appropriation doctrine is to achieve maximum beneficial use of water. Accordingly, in Colorado, water rights are subject to a “use it or lose it" rule. That is, water rights can be lost in whole by non-use and an intent to abandon, and they can be lost in part by under-use of the decreed amounts. Hence, the value of a water right is largely a function of its seniority (priority date) and its historical consumptive use.
The value of a water right is also measured by its historic consumptive use. “Consumptive use" is the amount of water that is applied to a use, which does not return to the stream system via surface or subsurface return flow, but is fully consumed through evaporation, evapotranspiration and other processes. In light of the “use it or lose it" rule, the historic consumptive use becomes the actual legal measure of the water right, with the decreed amount representing the original maximum limitation on the amount of the diversion to satisfy the use.
Every water court decree establishes an amount of use, a type of use, a place of use and, typically, a season of use for the water right. Such parameters represent strict legal limitations on the use of the water right, until and unless the parameters are subsequently changed in another water court proceeding. Any use beyond these limits, whether intentional or unintentional, is deemed an illegal expansion of use.
A water right can be changed (e.g., from agricultural to municipal use or from one location of use to another) only if the change will not injure other water rights. In order to assure the absence of injury after the water right is changed, only the lawful historical consumptive use of a water right may be changed to a new type and place of use; return flows must typically be left in the stream; and the return flow patterns must typically be preserved, to name a few of the considerations that will be at issue in any change of water right.
New appropriations with junior priority dates are typically not dependable without augmentation plans because they are unlikely to be usable, particularly in years of below average stream flow. In over-appropriated river basins, new junior underground (well) water rights simply cannot be obtained without an augmentation plan. This is because well depletions to a stream system cannot be stopped by merely turning off the well. Well depletions may take months and even years to affect the stream system. Therefore, turning off a well when senior appropriators are calling for water will not prevent the well depletions from affecting the stream. Therefore, appropriators in over-appropriated basins are not permitted to decree junior well rights (or operate wells) unless they have augmentation water to replace the well depletions that will reach the stream during times of call.
New water rights may be decreed in surface, storage and ground water (subject to the foregoing). An applicant for a new water right must prove that it either has already appropriated the water; that is, used the water on a specific date, in a specific amount and location, and for a specific legally recognized purpose, in which case, an “absolute" water right will be awarded. Alternatively, an applicant may prove that although it has not yet used the water, it intends to use the water applied-for, and that it can and will complete the appropriation within a reasonable time, in which case a “conditional" water right will be awarded. Conditional water rights, accordingly, like changes of water rights, will not be awarded for speculative purposes (see below). A conditional water rights holder must show diligence in ultimately applying the water right to beneficial use and must every 6 years until the right is made absolute, go back to Water Court and prove its diligence and failure to do so will result in cancellation of the conditional right. Once the right has in fact been put to a specific use, the Water Court, upon competent proof thereof, will award an absolute water right.
It should be noted that if a water right to be changed is represented by shares in a ditch, irrigation or reservoir company, the company’s bylaws may (and often do) place certain restrictions upon the ability to change the water rights. Restrictions of this nature are often referred to as “Catlin" provisions, after the name of the seminal case enforcing such restrictions. Common Catlin restrictions may include proscriptions against changing use without company board approval, proscriptions against changing the usage of the water out of agricultural use or transferring the place of use off of lands historically irrigated by the shares to be changed.
It should also be noted that that in addition to surface water rights (which broadly include reservoir rights filled via surface diversions, spring rights, and rights in underground water hydrologically connected to a surface stream), all of which are subject to the priority system described above, Colorado also recognizes a category of ground water, “designated ground water," that is subject to a modified priority system established and governed by separate a statutory and regulatory framework, as well as “nontributary" and “not-nontributary" ground water that are regulated by an entirely different statutory framework and is not subject to any priority system. Water within “designated ground water basins" is subject to a priority system within the basin itself, and applications to appropriate designated ground water are subject to the jurisdiction of and rules established by the Colorado Ground Water Commission and applicable ground water management districts.
 Generally speaking, such injury is prevented if the out-of-priority water user augments its depletions with (i) junior water decreed for augmentation that was stored in priority (i.e., stored at a time when senior water rights were also fully satisfied), or (ii) with water rights that cannot be “called out," for example, non-tributary water rights, or very senior water rights that have been quantified and changed to permit such augmentation use.