This post will focus on everything you've ever wanted to know about water rights. Two doctrines will guide what you need to know about water rights: the riparian doctrine, and the prior appropriation doctrine.
Under the riparian doctrine, water belongs to those who own the land bordering a watercourse. These rights attach to all contiguous tracts held by the same owner, provided one of the tracts abuts the water.
The riparian doctrine can be subdivided into two theories:
The natural flow theory states that a riparian owner's use of the water may be terminated if it results in substantial or material diminution of the water's quantity, quality, or velocity. The reasonable use theory, in contrast, states that all those who have riparian rights share the right of reasonable use. One riparian owner's use of the water is not enjoinable unless it substantially interferes with the use of another riparian owner's rights. Courts balance the utility of the owner's use against the harm to other owners, and to do so they use the following factors: purpose of use; extent of use; destination of water taken; alteration of the flow of the water; whether the water has been polluted; etc.
Under both the natural flow theory and the reasonable use theory, natural uses of the water prevail over artificial uses of the water.
The prior appropriation doctrine differs in material ways from the riparian doctrine. Under the prior appropriation doctrine, the water initially belongs to the state. The right to divert the water and use it for their own benefit can be acquired by an individual through actual use. Generally, the principal of first in time, first in right applies. The person who first uses or diverts the water will acquire the rights to that water. Worth noting that this right can be lost by abandonment.
There are a few specific rules to note about groundwater, water beneath the surface of the earth. The absolute ownership doctrine states that the owner of the land that overlays the groundwater can take all the water for any purpose. A more limiting doctrine is the reasonable use doctrine which states that one use, exporting the water, is allowable only if it does not harm other owners who have rights in the same water. The correlative rights doctrine states that owners of the land overlaying the groundwater own the water as joint tenants and each joint tenant is allowed reasonable use. The appropriative rights doctrine looks to priority: the the first to use the groundwater will determine ownership. The Restatement has a bit to say on this as well: under the Restatement, an owner of groundwater may use the groundwater unless such use unreasonably harms neighboring landowners, exceeds the owner's reasonable share, or directly and substantially affects surface waters and unreasonably harms the users of surface water.
In contrast to groundwater rules are the rules dealing with surface waters. Surface water is water above the surface of the earth that has not yet reached a natural watercourse, such as rainwater, water from melting snow, etc. A landowner can use surface water within their boundaries for any purpose. There are, however, some limits as to the methods by which landowners might attempt to change the natural flow of that surface water.
The natural flow theory states that owners cannot alter natural drainage patterns. This is the most limiting theory on surface water. The common enemy theory, in contrast, states that an owner can take any protective measures to get rid of the water or divert its flow. This is the least limiting theory on surface water. Lastly, the reasonable use theory balances the right of the owner to divert the water with the rights of others not to be harmed by that diversion.
With surface water, the key contrast is between capturing and diverting. There is no limit to the capture of surface water, but there may be some limits on diverting it.