What Are Water Rights?

Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she's not busy recalculating her F.I.R.E. number o.

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Written By Kelli Pate Contributor

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Kim Porter began her career as a writer and an editor focusing on personal finance in 2010. Since then, her work has been published everywhere from Forbes Advisor to U.S. News & World Report, Fortune, NextAdvisor, Credit Karma, Bankrate, and more.

Published: Jun 23, 2023, 5:00am

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The average American family uses more than 300 gallons of water at home every day, according to the Environmental Protection Agency. As such, laws are often put in place to govern water usage. In the U.S., water rights are state managed and apply to groundwater and surface water usage.

What Is a Water Right?

A water right is the legal right of a property owner to use, sell, divert and manage water from a specific source for a specific purpose. These sources include both groundwater (such as well water) and surface water (such as rivers, lakes and streams) that border the land they own.

Are Water Rights Real Property?

Water rights mirror real property rights under the “prior appropriation doctrine,” a system that allocates water rights based on a “first in time, first in right” principle. In other words, the first person, corporation or municipality to divert water from a source for beneficial use—such as household, agricultural or industrial purposes—has the vested right to continue using the appropriate amount of water for that purpose.

Prior appropriation dictates that overall water usage from that source is based on seniority, with priority going to the most senior user even in times of shortage. In some areas, water rights can be sold or transferred separately from the land on which the water source exists, making them similar to real property.

Who Owns the Water Rights to a Property?

In the U.S., surface water sources are generally considered public property and cannot be owned by any specific individual or group. Groundwater, meanwhile, can be either publicly or privately owned. The ownership of a property’s water rights is determined by whomever has rights to use the water, and by the type of water rights doctrine applied to the source.

The type of doctrine also dictates whether water rights are attached to property ownership or are considered a separate property right altogether, in which case the transfer of property ownership doesn’t guarantee that the water right is also transferred.

How Do Water Rights Work?

Although water quality falls under the purview of the federal government via the Clean Water Act, water rights are managed by the states. Water laws vary by state, but there can also be “substantial differences in how water is managed and allocated” within municipalities in the same state, according to climate fintech firm Aquaoso.

Types of Water Rights

The types of water rights depend on the specific water source: surface water or groundwater.

Surface Water Rights

In eastern states, water rights are usually governed by the riparian doctrine. Western states typically apply the doctrine of prior appropriation. Some states, including California and Texas, use a combination of riparian and prior appropriation rights.

Riparian Water Rights

The riparian doctrine grants equal water rights to landowners whose property adjoins the surface water source, such as a stream, lake or river. According to The National Agricultural Law Center, riparian landowners can make “reasonable use” of the water “as long as that use does not interfere with the reasonable use of another downstream riparian landowner.” Reasonable use refers to purposes such as bathing, irrigation, drinking water and more.

Water rights are attached to the land under a riparian rights system and automatically included in the transfer of property. In addition, riparian water rights do not expire, and all riparian rights holders share shortages equally during times of drought.

Prior Appropriation Water Rights

The prior appropriation doctrine applies a “first come, first served” principle to manage water rights. Here’s how it works:

The first person to divert water from a source for “beneficial use” is granted first priority in allocations of water from that source. While the state determines the definition of beneficial use, it generally refers to any purpose that isn’t wasteful, including for drinking water, irrigation or recreation.
Future users are allowed to access that water only once the senior appropriator has exhausted their needs.
In most states that have adopted the prior appropriation doctrine, appropriators (also called permit holders) forfeit their water rights if they fail to use their full allocation every year for a certain period of time, sometimes as little as five years.

Groundwater Rights

Rules concerning groundwater allocation are governed by states and are separate from those for surface water rights. Many states use a combination of legal doctrines to regulate groundwater rights.

Absolute Dominion Water Rights

Also known as the “rule of capture,” absolute dominion water rights allow landowners to divert as much water from a groundwater source as they please, regardless of the impact on other users. This means they can monopolize a groundwater source without incurring liability.

According to The National Agricultural Law Center, only 11 states follow this rule.

Reasonable Use Water Rights

The reasonable use doctrine modifies the absolute dominion rule by allowing for the unrestricted use of groundwater for “reasonable” purposes, provided that the use emanates from the source’s overlying land.

Correlative Water Rights

Similar to riparian water rights for surface water, correlative water rights for groundwater apply a “proportionality rule,” which means a landowner “must limit the use of groundwater to not interfere with the use of the water by others overlying the aquifer,” according to the Water Systems Council. Correlative water rights do not, however, prohibit off-tract uses.

Restatement of Torts Water Rights

The restatement of torts doctrine combines features of the absolute dominion rule and the reasonable use doctrine. It allows groundwater use without liability so long as said usage does not cause harm to neighboring users or exceed a reasonable portion of the total groundwater available. It also cannot damage nearby surface waters, such as a lake.

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