From the Valley Courier (Judy Lopez):
Colorado administers water under the Prior Appropriation Doctrine. This means that those who put the water to beneficial use first are entitled to get their water first during times of shortage.
The Colorado Constitution declared that all water in every stream belonged to the people of the state and was subject to appropriation. In 1879, Colorado established the Water Commissioner to distribute water rights in priority based upon the principle of “First in Time… First in Right”.
Sooo… “Priority of right to water by priority of appropriation is older than the state constitution itself, and has existed from the date of the earliest appropriations of water within the boundaries of Colorado,” (Farmers Highline Canal& Reservoir Co) which was established way back on April 10, 1852, with the San Luis Peoples Ditch.
What this means in water lingo is that those with earlier decreed rights “prior” have senior rights and can divert their water before later decreed rights. It is a matter of timing, at least as far as acquiring the right goes.
The second part of the “appropriation” system requires the agency (private person or business) put the water to beneficial use according to the procedures of the law. This requires the appropriator to have a plan to divert, store, capture, control or posses the water in order to put it to beneficial use.
What is beneficial use? This is a moving target and can depend on the economy, the community, and the values and ethics of the users. There are, however, recognized beneficial uses: augmentation, CWCB in-stream flows, commercial, domestic, dust suppression, evaporation from a gravel pit, fire protection, fish and wildlife, flood control, industrial, irrigation, mined land reclamation, municipal, nature centers, power generation, water and gas production, recreation reservoirs and in-stream flows, release of storage for boating and fishing, snowmaking and stock watering.
More Colorado Water 2012 coverage here.