I took bid data (thanks Lois!) and made this chart of supply and demand*
This auction is useful for two reasons: (1) It shows that farmers are willing to pay a lot when water is scarce (no need to go to DC to take water from the environment) and (2) markets for water can work, when they are allowed. I hope that the sale closes and everyone gets water/paid.
If I were running this auction, I would allow multiple bids (so nobody was surprised at price or who won) AND set a single price based on the highest rejected bid (here, $1,100/af), which would reduce "shading" by buyers hoping to pay less for water. This (discriminatory) auction tends to lead to regret by buyers who bid more than $1,100 (more here [PDF]).
Bottom Line: Let markets allocate (economic) water when
* Bids still need to be confirmed as eligible. That fact does not matter if we take thee as serious, which they probably are. The bid indicate where demand sits.