What is Water Banking?
In simple terms, water banking is the temporary transfer or exchange of water from one use in time (e.g., irrigation consumptive use) to another place (e.g., storage of consumptive use savings in a reservoir) for some future use (e.g., municipal drinking supplies).
The following graphic shows how this might work in the context of the Colorado River system. IMPORTANT NOTE: This is just a theoretical example – at present, there is no legal mechanisms to do this. Although Colorado water law does allow for the transfer or exchange of water rights within the state, there are no provisions to allow such a transfer or exchange outside the boundaries of the state.
Additional water banking examples / studies / resources: http://www.coloradoriverdistrict.org/water-banking/