By Christina B. Farnsworth. "Whiskey's for drinkin' and water's for fightin' over," goes the Western proverb often attributed to Mark Twain. Laws already exist in Arizona and California requiring new developments to prove they have an assured 100-year water supply. Now certain California areas, such as Monterey County, are struggling to meet California's "fair share" affordable housing requirements (or, for that matter, any other new housing needs), because water moratoriums have stopped new construction. And that was before the Feds turned more spigots off.

The West's water woes hit the headlines when the U.S. Department of the Interior kept its New Year's Day promise to shut off excess water delivery to California and Nevada. The two Western states habitually exceeded their allocation of Colorado River water. The other states sharing the stressed resource are Arizona, Colorado, New Mexico, Utah, and Wyoming. While those five states have not exceeded their allocation, some New Mexico communities have already implemented water regulations that impact home building (see "Toilet Taxed").

California's Imperial Water District, the agency that governs water use in the Imperial Valley, was blamed for the U.S. Department of Interior's shut-off because it refused to sell water to thirsty San Diego. San Diego sued on January 10.

In March, California state officials finally agreed on a plan to transfer 200,000 acre-feet (an acre-foot is 325,850 gallons and covers one acre one foot deep) of water from the rural Imperial Valley, the state's largest water user, to residential users 50 miles away in San Diego.

California now has until 2015 to wean itself from the excess Colorado River water. That will be a considerable challenge as the state's population grows (there were more than 4,000,000 new "flushers" just in the 1990s).

Learn more about markets featured in this article: San Diego, CA, Los Angeles, CA.