HOT SULPHUR SPRINGS, Colo.—Colorado’s largest water utility and two western counties have ratified a deal aimed at balancing the Denver-area’s demand for water with the needs of mountain communities and avoiding costly legal battles.

Denver Water and the leaders of Grand and Summit counties signed the Colorado River Cooperative Agreement on Tuesday along with the Colorado River District and the Clinton Ditch & Reservoir Co.

The deal has been in the works for six years. The negotiations were challenging because of Colorado’s complicated water laws and a history of distrust between eastern and western Colorado over water.

Gov. John Hickenlooper joked that the water wars have now been scaled back to “rubber bullets and bean bag shotguns.” He said he hoped other similar deals would be worked out across Colorado, where 80 percent of the water comes from west of the Continental Divide but 80 percent of the demand is in the more populous east.

“Colorado is the ultimate beneficiary,” he said.

Denver Water—which serves about 1.3 million people in the Denver area—and nearly three dozen Western Slope water users announced the proposal last year. Eagle County and its water districts became the first to sign in February. The endorsement of the cities of Rifle and Glenwood Springs and some irrigation districts is still pending.

Under the deal, Denver Water will contribute $25 million to western Colorado projects and limit its service area. In return, the signers won’t oppose Denver Water’s proposal to hold more mountain water in Gross Reservoir.

The utility’s future water development projects also need to be approved by the Colorado River District and counties hosting the projects. The deal encourages conservation and allows for sharing with other Front Range communities.

In Summit County, home of the utility’s largest reservoir, Denver Water agreed to pay $11 million for projects including improvements to a wastewater treatment plant and to provide 250 acre-feet of water to districts and towns for free. Denver Water also plans to keep Dillon Reservoir full enough to support summer boating and fishing.