AbstractThe development of Arizona ground‐water policy has been evolutionary. Courts and the State legislature have responded to particular problems, but until recently have stopped short of a comprehensive framework for such policy. This paper identifies and describes the major political forces of change responsible for reform of ground‐water law in Arizona. Historical developments surrounding the development of such policy are examined to interpret these forces of change. A detailed historical account of the development of Arizona ground‐water policy provides a useful perspective from whichto examine the principal forces of change driving the reform of this portion of State water policy.Arizona ground‐water policy has evolved from a previous policy of nonmanagement to “after the fact” management currently embodied in the 1980 Groundwater Management Act. Changing social attitudes and political challenges have continued to alter the institutional framework of the water policy‐making process ultimately shifting the arena from the judicial to the legislature. After nearly half a century of political conflict, judicial decision and legislative response, Arizona enacted a comprehensive ground‐water code.Political forces characterized by repeated Federal threat affecting a major reclamation project and special interest group pressures resulting from a 1976 judicial decision combined with the physical realities of ground‐water exploitation to force reform in the State ground‐water policy. Due to high decision costs, such reform was achieved through structural decisions delegating the more difficult allocative decisions to special interests directly affected by the ultimate policy. In turn and out of political necessity, a far‐reaching, progressive legislative proposal for ground‐water policy became the product of a delicately negotiated compromise among competing water interests achieved through the process of agreement. After the major decision costs had been incurred through such negotiations, the reform initiative was then ratified by the State legislature as the 1980 Arizona Groundwater Management Act, absent the tremendous political costs otherwise inevitable to