We covered this in another article as part of the Many Sources of Economic Rent series, but as a brief recap:

There is a taxable surplus in water resources that we currently leave on the table to those who control access to finite water sources through water rights. Right now we let these water rights go as a cash cow to speculators and owners in general while letting them be traded freely instead of being charged for, all for a thing nobody produced and can not produce more of.

In order to avoid wasting water in the hands of speculators and uncharged extractors, those who own and extract water have to pay the full cost of removing that piece of the finite natural world to the rest of society.