Despite the scarcity of water this year, water prices in Colorado have dropped in major markets, such as the northern Front Range, as construction of new homes flatlines and infertility and aging slow population growth, according to a new report.
In northern Colorado, for instance, prices for Colorado-Big Thompson Project water dropped to $85,000 an acre-foot in 2025, down from a high of $101,000 in 2022, according to WestWater Research, a Boise-based consulting firm that tracks water transactions in Colorado and across the American West. One acre-foot of water equals 326,000 gallons, enough to serve two to four urban households for one year.
“In 2025, we’ve seen the prices drop from a record high, indicating that there is not as much demand for it as there was in 2022, when they were building a lot of houses,” said Justin Bowen, a Colorado-based WestWater hydrologist and author of the report.
The federal Colorado-Big Thompson Project brings water from the Western Slope to the northern Front Range, and its shares can be bought and sold publicly without a special water court review, providing a key benchmark in water pricing.
WestWater Research tracks deals across the West and looked at 2.5 million acre feet of water in leases and sales worth a combined $1 billion for its latest annual report.
Water prices are influenced by supply and demand as well as factors such as housing and population growth, Bowen said. In large swaths of Colorado that means the price of water has declined.
In the most water-starved areas of Colorado, prices are rising
But in some areas, where water is more scarce and cities are thirstier, such as the Arkansas River Valley in the southeastern corner of the state, water prices have risen since 2022, according to the report.
The small Twin Lakes system, part of the federal Fryingpan-Arkansas Project, saw prices rise 17% between 2022 and 2025. It also brings water from the Western Slope to the southern Front Range.
Water prices have risen dramatically in other Western states as well, with Arizona, for instance, seeing a 75% increase. That Colorado water prices have softened or dropped in recent years speaks to a slowdown in the state’s overall growth rates, experts said.
As fewer U.S. citizens have moved to the state, growth has become more dependent on international immigration, and that too has slowed, according to data from the Colorado State Demography Office. The changes led the office to downgrade its growth forecast from 1% annually in 2024, to 0.6% in 2025.
Those slower growth numbers, particularly in housing, are likely to continue, according to Brian Lewandowski, an economist with the University of Colorado Leeds School of Business.
“Residential building permits in Colorado hit a cycle peak in 2021 and decreased every year since. Our forecast for 2026 is flat to a modest decline in permits,” Lewandowski said via email.
Looking ahead, the deep drought of 2026 across the American West is likely to continue to drive increases in water prices in high-growth, water-short areas such as Arizona and Texas, according to the report.
But almost equally important, according to Bowen, the pricing of water means that more and more of it will flow to cities and industries that can afford to pay higher prices for water held by agriculture.
Looking ahead, there is no ignoring the drought emergency gripping the West, Bowen said. How that will impact next year’s water prices in Colorado isn’t clear yet.
Bowen is keeping an eye on the El Niño cycle predicted to arrive later this year, bringing heavy rains to Colorado and other Western states.
“This year there might be quite a bit of moisture, so we expect a potential rebound in supply … but will prices go up? It really depends,” Bowen said. “We’ve been in this incredibly dry year and that has constrained supplies. But we are not necessarily seeing growth.”