Water is a scarce commodity in Arizona. While market forces tend to determine the allocation of most goods and services, a complicated system of law and institutions superimposed on varying land and water forms and patterns of development makes the allocation of water resources extraordinarily complex. Add to that Arizona’s rapid population growth rates, the potential for conflict over water resources is great. The quote attributed to Mark Twain, “Whiskey’s for drinking, water’s for fighting about,” points to a long history of water resource conflicts. No stranger to water conflicts, Arizona has a good record of resolving them. The 1980 Groundwater Management Act is hailed as an innovative, successful framework for managing groundwater in parts of Arizona designated Active Management Areas. Figure 1 shows the location of the five AMAs. Enactment of rules governing new municipal uses of groundwater and increasingly stringent water management plans have assisted the AMAs in moving toward their statemandated groundwater management goals. Since the passage of the Act, the Central Arizona Project has been completed. Its delivery and storage capabilities have provided dry and thirsty Central Arizona communities with surface water needed to sustain and grow their economies.