The waters of the Colorado River are shared by 7 Western States and the Republic of Mexico. A complex series of legislation, treaties, and agreements divides the Colorado River's water among the states and between the United States and Mexico.

Each year, approximately 6 million acre-feet of Colorado River water is regulated at Imperial Diversion Dam, just north of Yuma, Arizona, for irrigation and other uses in California, Arizona and Mexico. That water must be released from storage in Lake Mead, nearly 300 miles to the north.

It takes around five days for water released from Lake Mead to reach Imperial Dam (or approximately three days from Parker Dam to Imperial Dam). By the time the water arrives at Imperial Dam, the water users that scheduled it may not be able to put it to beneficial use due to changed weather conditions, high runoff into the river, or a number of other factors. Unless there is a way to store this unneeded water, it cannot be put to beneficial use within the United States.

Some of this water may be stored in Senator Wash Reservoir, a pumped-storage facility about two miles upstream from Imperial Dam. Senator Wash Dam was constructed specifically to manage fluctuating flows at the lower end of the Colorado River, but the storage capacity of this facility is limited. Water that cannot be diverted at Imperial Dam or stored in Senator Wash Reservoir is called "non-storable" water.

Since the current drought began in 2000, more than 900,000 acre-feet of non-storable Colorado River water has flowed to Mexico. That is in addition to more than 600,000 acre-feet of water from the Wellton-Mohawk Irrigation and Drainage District that bypasses the Colorado River and is discharged to the Cienega de Santa Clara in Mexico.

To address this situation, the Bureau of Reclamation and Lower Colorado River Basin stakeholders in Arizona, California, and Nevada conducted a study to identify additional regulatory storage opportunities below Parker Dam. The study determined that building a small reservoir near the All-American Canal in Imperial County, California, was the best alternative to meet the objectives for conserving Colorado River water.

Reclamation will manage the construction of this additional regulating reservoir along the All-American Canal in southern California (Drop 2 Storage Reservoir). The 8,000 acre-foot reservoir will roughly double current regulatory storage capacity on the lower Colorado River.

Improved regulatory storage above the Mexican border will save on average 70,000 acre-feet of Colorado River water each year. The Lower Colorado River Basin states of Nevada, Arizona, and California, will fund construction and, in return for their investment, will receive a specific amount of additional water. The remainder of the saved water accrues to the river system.