Arizona gets nearly 40 percent of its water from the Colorado River, and starting next year the state is in line to sharply cut the amount it takes from the river.

The three-state Drought Contingency Plan is aimed at shoring up the river's reservoirs, which are dwindling due to chronic overuse, 19 years of drought and rising temperatures.

Lake Mead and Lake Powell are used like a big water bank account for states from Wyoming to California, and the main collective strategy for stabilizing their levels and boosting the balance is to draw out less water. The drought plan creates a blueprint to do that.

The Arizona Legislature passed legislation on Thursday clearing the way for the state to participate in the plan. If California, Nevada and the federal government all sign on, the Drought Contingency Plan will govern water cutbacks that could begin as soon as next year.

READ MORE: Arizona Legislature passes historic drought plan

Lake Mead is now 40 percent full. A first-ever shortage could be declared in 2020 if federal officials determine this August that the lake is projected to be below elevation 1,075 feet at the start of the year.

Under the plan, Arizona's total use of Colorado River water would decrease by more than 500,000 acre-feet, or 18 percent of the state's legal entitlement, during the first year of a shortage. That will mean taking less water from Lake Havasu and pumping less into the 336-mile Central Arizona Project Canal, which cuts across the desert, passes through Phoenix and ends in Tucson.

CAP board President Lisa Atkins has said the state's plan, which was negotiated over the past seven months, effectively "shares the pain" among those who will have to bear the brunt of the reductions in water deliveries.

Arizona's plan for divvying up the cuts involves three main components:

Deliveries of “mitigation” water to help lessen the blow for farmers and other entities.

Compensation payments for those that contribute some of their water.

“Offsets” that involve moving credit for water stored in Lake Mead between different water agencies and other entities.

Here's a breakdown of how water supplies are expected to shift under the framework of agreements that have been worked out in Arizona.

Mitigation water

The biggest recipients of “mitigation” water will be central Arizona farmers, who have the lowest-priority allocations and whose irrigation districts belong to what water managers call the Agricultural Pool.

The farmers in Pinal County and other areas now receive about 275,000 acre-feet of water per year, using it to grow crops including cotton, wheat, alfalfa and cantaloupes. (Each acre-foot is 325,851 gallons, enough water to cover a football field nearly 1 foot deep.)

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If it weren't for the "mitigation" water, the farmers would see their CAP water cut off completely.

Under the deal, the agriculture districts will get 105,000 acre-feet per year from 2020 through 2022. That water is slated to come from a list of entities, including cities that otherwise would have banked the water underground, the private water company Epcor, and CAP water that is stored in Lake Mead and Lake Pleasant.

A deal with the city of Tucson would provide a backstop for the Pinal County farmers in the event of a more serious "tier 2" shortage at Lake Mead, providing enough water — 35,000 acre-feet of water per year for two years — to guarantee the growers would get a steady 105,000 acre-feet per year for those first three years.

The farmers in central Arizona now use a mix of Colorado River water and groundwater pumped from wells. After the first three years, the plan calls for them to increase groundwater pumping — using an additional 70,000 acre-feet per year.

The irrigation districts are set to receive $9 million from the state to help cover part of the costs of drilling new wells, buying pumps and building other infrastructure. The agriculture districts are also seeking federal funding to help. And the growers say that even with the additional groundwater pumping, they expect they'll need to leave about 40 percent of farmlands dry and fallow.

Some of the mitigation water will also flow to a group of water users known as the Non-Indian Agriculture Pool, or NIA. This name was originally used for CAP-delivered Colorado River water that was bought by farmers.

But rapid urban growth and Indian water settlements have made the Non-Indian Agriculture Pool a misnomer. The entities that now get the water include tribes — the Gila River Indian Community and the Tohono O'odham Nation — as well as cities including Phoenix, Gilbert, Chandler, Mesa, Glendale, Scottsdale and Tempe.

The state's plan is structured so that NIA water users will get "mitigation" water to replace the water they're losing under the cutbacks. Those amounts include about 47,800 acre-feet during the first two years, and different amounts in subsequent years.

The Gila River Indian Community is set to receive $60 million to forgo most of the NIA water they would otherwise be entitled to.

Some of the water for the NIA group would come through an exchange between Salt River Project and the agency that manages the CAP Canal. Under this trade, SRP will deliver water to cities in the area, and in return CAP will earmark 50,000 acre-feet of water that’s stored in Lake Mead for SRP.

MORE:These key players could decide the fate of the Colorado River drought deal

CAP officials also estimate they will deliver about 30,000 acre-feet of "operational supplies," or water that has been ordered but not delivered, to help reach the total amount of makeup water that’s needed.

The plan lays out a schedule of estimated deliveries of "mitigation" water between 2020 and 2025 based on the latest projections for Lake Mead. If the reservoir is in a "tier 2" shortage in 2025, for example, Native American communities in the "Indian Priority" group would receive 12,767 acre-feet of "mitigation" water that year.

‘Offsets’ and payments for water

Arizona's plan involves more than $100 million in funding from the state and the Central Arizona Water Conservation District, which manages the CAP canal. Much of the money would go toward paying for water from the Gila River Indian Community and the Colorado River Indian Tribes.

The Colorado River Indian Tribes agreed to take 10,000 acres of farmland out of production for three years, leaving the fields dry and freeing up the water so that it can be kept in Lake Mead. In return, the tribes are to receive $38 million, including $30 million from the state and $8 million contributed by nonprofit groups.

READ MORE: How Arizona's drought plan could affect you

The 150,000 acre-feet of water that the Colorado River tribes plan to generate over three years by leaving fields fallow would remain in Lake Mead — a significant piece of the water "offsets" called for under the plan.

The "offset" provisions add up to 400,000 acre-feet over six years, all of which is water that will remain in Lake Mead to prevent its levels from falling further.

The Gila River Indian Community is set to leave 150,000 acre-feet of this "intentionally created surplus" water in the reservoir in exchange for payments from the federal government and the Arizona Water Banking Authority. The community also has volunteered to keep 50,000 acre-feet more in Lake Mead without compensation.

Carrying out the state's plan involves a list of about a dozen separate agreements among government agencies, water districts and tribes.

While lawmakers were discussing the plan on Thursday, the Central Arizona Water Conservation District board held a separate meeting and endorsed a related agreement. It allows the district to enter into an agreement with the federal government to implement the Drought Contingency Plan.

Will residents be affected by the new plan? Unless you are a Pinal County farmer or one of the city, county and tribal water managers moving supplies around in exchange for something in this deal, you likely will not notice anything. Ducey suggested recently, he will promote water conservation education to Arizonans, asking them to use less water and save money.

So you can still expect to have water in your tap, as no direct cutbacks are likely, but you may soon be asked to voluntarily use less. If lawmakers continue these conservation conversations and turn those discussions into enforceable legislation, that is another issue for another day.

Reach environment reporter Ian James at ian.james@arizonarepublic.com, 602-444-8246 or on Twitter at @ByIanJames.

Reporter Andrew Nicla contributed to this story.

Environmental coverage on azcentral.com and in The Arizona Republic is supported by a grant from the Nina Mason Pulliam Charitable Trust. Follow The Republic environmental reporting team at environment.azcentral.com and at OurGrandAZ on Facebook, Twitter and Instagram.