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In Arizona, the policy debates over the Colorado River Basin Drought Contingency Plans exposed long-running tensions surrounding how we use and value scarce water resources in a desert. These negotiations also highlighted generations-old disputes between indigenous communities’ water rights and Anglo settlers. This paper explores how irrigators respond to, and participate in, the crafting of institutional arrangements while at the same time experiencing increased exposure to climatic and hydrological risk. Our analysis incorporates qualitative interview data, a literature review, archival information from policy reports, and secondary data on water use and agricultural production. Building on the fieldwork with farmers and water experts that we completed before the drought contingency planning efforts began, we describe the status quo and then explore potential future contexts based on shifting incentives and on the constraints that arise during periods of Colorado River water shortages. Through an understanding of the socio-hydrological system, we examine the region’s agricultural water use, water governance, indigenous water rights and co-governance, and the potential future of agriculture in the region. Our study illustrates how the historic and current institutions have been maintaining agricultural vibrancy but also creating new risks associated with increased dependence on the Colorado River.