Tucson, Arizona is often said to have a water problem. The water table is falling, giving rise to concern on the part of the public and conflicts between water users in the Basin. Many see the problem as a shortage of water to be solved by bringing more water to Tucson by means of the Central Arizona Project. This dissertation examines the occurrence and use of water in the region in order to determine the real nature of Tucson's water problem. First, the institutions governing the use of water in the Basin are described and the disputes between the local water users are discussed. Next, an account is given of the use of water by businesses and residences in Tucson, by the copper mines to the south of Tucson, and by the farms in the Basin. The effect of changes in the cost and availability of water on each of these classes of water user is investigated and the effect that changes in water use could have on the region's economy is discussed. Next, an account is given of the water available for use in the Basin. The occurrence of groundwater in the region is described and the merits of the proposed Central Arizona Project are investigated. The information on the use of water in the Basin and the information on the sources of water available for use in the Basin are then combined to forecast the depletions of groundwater that will take place under various circumstances. Various ways of balancing the region's water budget are described and an assessment is made of the effect that curtailing the use of water in the region would have upon the local water users and the region's economy. The principal conclusions of this study are as follows. First, there is no danger of the supply of water in the Basin becoming exhausted in the near future. The economic and physical effects of the continuing fall in the level of the water table are unlikely to be serious. The second main conclusion is that the region's water budget could be balanced very economically by retiring all agriculture in the region and making modest reductions in the amount of water consumed by urban water users and the copper mines. Given suitable institutional arrangements, curtailing the use of water in the Basin would be a much more economical way of balancing the region's water budget than building the Central Arizona Project. The final conclusion is that the real water problem is an institutional problem. The threat of the Indians' claims to the groundwater of the Tucson Basin, together with the difficulty of resolving the continual disputes between the mines, the farms, and the City of Tucson over water puts all of the local water-using interests in a position where they see the provision of more supplies of water as the only cure to their woes. The remedy to the region's water problem is not the provision of more supplies of water, but a settlement of the Indians' claims and a reform of Arizona's groundwater law to enable a resolution of the conflicts between the water users in the Tucson Basin.