The Colorado River Compact is an agreement made in 1922 among seven U.S. states that rely on the waters of the Colorado River. The states involved are Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming. The compact was created to allocate the river's water resources, ensuring that each state receives a fair share for agricultural, municipal, and industrial use. The compact divides the river's flow into two basins: the Upper Basin and the Lower Basin. Each basin is responsible for delivering a specific amount of water to the other. This agreement has been crucial in managing water resources in the arid southwestern United States, especially as demand has increased over the years.