Institutions are essentially the "rules" of water allocation. In the arid West, these include such legally-defined systems as prior appropriation doctrine, beneficial use, proportional sharing schemes, private ownership and markets, and modifications to rules that have occurred over time. Prior appropriation (PA) and beneficial use are perhaps the most important factors to consider in the region. Under PA, the first person to divert water for a beneficial purpose acquired a "priority date" at that time to use that specific amount of water for the specific beneficial use indefinitely in the future. Successive claims receive a specific amount and use, with the water delivered by priority date. 

Prior appropriation is the predominant institution in all Great Basin states. It facilitated development of irrigated agriculture by a process of permitting changes in place of use (POU) and purpose of use. Landowners can apply for a change in POU while keeping their original quantity and priority of water to irrigate different locations of their land. Water rights can be transferred from irrigation to municipal uses, but transfers are permanent, meaning these rights cannot be transferred back to agriculture.