For the great purposes of irrigation and hydraulic mining the water has no value in its natural channel. In general the water cannot be used for irrigation on the lands immediately contiguous to the streams -- i.e., the floodplains or bottom valleys -- for reasons more fully explained in a subsequent chapter. The waters must be taken to a greater or less extent on the bench lands to be used for irrigation. All the waters of all the arid lands will eventually be taken from their natural channels, and they can be utilized only to the extent to which they are thus removed, and water rights must of necessity be severed from the natural channels.Thus we see Powell et al.'s comments on the 1860 Homestead Act, which allowed up to 160 acres/person. They note that land in the Arid Region (which one could buy from the government for $0.25/acre after three years of habitation) is not suitable for 160 acre parcels, since there are few "minor" streams. Powell et al. suggest that settlers combine to form irrigation districts for the purposes of constructing and maintaining infrastructure to divert water from the larger streams in the Arid Region [p. 27].
The ancient principles of common law applying to the use of natural streams, so wise and equitable in a humid region, would, if applied to the Arid Region, practically prohibit the growth of its most important industries. Thus it is that a custom is springing up in the Arid Region which may or may not have color of authority in statutory or common law; on this I do not wish to express an opinion; but certain it is that water rights are practically being severed from the natural channels of the streams; and this must be done. In the change, it is to be feared that water rights will in many cases be separated from all land rights as a system is now forming. If this fear is not groundless, to the extent that such a separation is secured, water will become a property independent of the land, and this property will be gradually absorbed by a few. Monopolies of water will be secured, and the whole agriculture the country will be tributary thereto -- a condition of affairs which an American citizen having in view of the interests of the largest number of people cannot contemplate with favor.
They describe a law on irrigation districts on p. 30 et seq. -- suggesting that the district be formed by 9 or more people, together controlling more than 320 acres, but individually controlling not more than 80 acres. In addition, the irrigation water rights should remain attached to the irrigated land and not be separable from it.
Thus we see a balancing act in which water is taken from natural channels but associated with land that is part of a larger irrigation district made of smaller owners.
This view of water management is in direct conflict with modern opinions that "in-stream" flows are a valuable use of water, and transfers of water (or rights) from the land where it was traditionally used.
I wonder how enthusiastic Powell would have been about transferring these "appropriated" waters over 100+ mile distances -- to farms or cities.
Bottom Line: Powell's vision was right in an age of yeoman farmers and low population density, but we must consider how to change water use in an era of environmental flows, heavy urbanization, and high productivity agriculture. I am talking more about a need to change laws and norms, not taking water rights from owners. Once laws and norms adjust, markets can take care of the rest.