During the early 1900's, the seven states of the Colorado River Basin: Arizona, California, Nevada, New Mexico, Wyoming, Colorado, and Utah negotiated for shares of Colorado River water. In 1922, representatives from the seven states and the United States government created the Colorado River Compact, which divided the states into lower and upper basins and gave each basin 7.5 million acre-feet of water to apportion. Arizona, California, and Nevada were sectioned into the lower basin, and were instructed to divide their 7.5 million acre-foot allotment among themselves.

Arizona was in dispute over its share of the river, however, and was the last state to approve the Compact in 1944. Today in the Lower Basin, Arizona has rights to 2.8 million acre feet of Colorado River water per year, California is entitled to 4.4 million acre feet per year and Nevada has annual allocation of 300,000 acre feet. One acre foot of water equals 325,851 gallons, the amount used by three families of four in one year.

In 1946, the Central Arizona Project Association was formed to educate Arizonans about the need for CAP and to lobby Congress to authorize its construction. It took the next 22 years to do so, and in 1968, President Lyndon B. Johnson signed a bill authorizing construction of CAP. The bill directed the Secretary of the Interior to construct the CAP, and contract for delivery of the CAP water supply and repayment of reimbursable costs.

In 1971, at the request of the Secretary, the Central Arizona Water Conservation District was created to provide a single entity to repay the federal government for the reimbursable costs of construction and contract for the delivery of CAP water. Construction began at Lake Havasu in 1973 and was completed twenty years later south of Tucson. The entire project cost approximately $4 billion to construct.