The withdrawal, diversion and use of water in Alberta is regulated under the Water Act. Under this Act, anyone who wants to divert or use water (other than for basic household or domestic use) must obtain a licensed allocation or approval to divert the water. Alberta Environment requires each applicant to explain the intended use and the rationale for the amount of water that would be diverted on an annual basis. However, an allocation is generally based on the maximum amount of water that an applicant expects will be required over the licencing period - meaning that the amount that is actually diverted and consumed in any particular year may be less than the full allocation. For example, in agricultural and irrigation practices, demand for water is typically lower during wetter years. This is because there is much more natural rainfall and surface runoff so higher diversions are not required. Or, municipalities may apply for enough water in order to reasonably meet their growing population needs into the future, even though it may not yet be required.

Because real usage information is important to determine how much water Alberta is consuming overall, large users are generally required to report how much water they have diverted, consumed and returned each year. Although Alberta Environment does not require each and every small license holder to submit this type of information, the majority of water volume can usually be accounted for by a relatively small number of large licenses. This is particularly true in the south, where the irrigation districts account for a good portion of the allocated water. Because of the circumstances described above, there is a significant difference between what has been licensed or allocated in Alberta and what is actually consumed. Examples from other large users of water are coal-fired power plants, which withdraw large volumes of water for cooling purposes - however much of that water is cycled through the operation and returned back to the environment. The same is true for municipalities that tend to return upwards of 80 to 90% of water that is diverted for water supply. When water is returned after being used, it allows other downstream users to benefit from the same resource. Therefore, an understanding of the underlying use of the water and not just the total allocation is also important.

Understanding the difference between allocations and actual use
This table shows recent surface water licensing data by major river basin. The "Allocated Volume from Surface Water Sources" column is very important as it shows the upper limit of how much water has already been allocated to license holders. Under the Water Act, this is the amount that can be legally diverted - although, the actual amount diverted is generally less for two reasons:

1. The full licensed amount is often not used;
2. The amount that is eventually consumed or lost is generally less than what is diverted because of return flows.

The most highly licensed basin is the South Saskatchewan (which includes the Bow, Oldman and Red Deer Rivers). In this instance, surface water license holders are entitled to divert 5,424,580,000 m³ or about 59% of the natural river flow. The consumptive surface water allocation, which is the maximum amount that can be consumed or lost under the terms of the licence, amounts to about 50% of the natural flow. But, even this does not give the actual number for water that is consumed in the basin because return flows are not accounted for. We can get an estimate of actual consumption from the South Saskatchewan River Natural Flows Study, obtained by subtracting the recorded flows from the calculated natural flows. Based on the study, over the past 20 years an average of roughly 2,167,166,000 m³ have been consumed or lost annually. This represents an average net consumption of 23% of natural flow - much less than the total amount allocated, and also less than the estimated consumption (50%) that was indicated by licenses. However, remember that in drier years not only is the demand higher but the available supply is lower - so the actual percent usage is much higher at a time when the water is needed the most.

Note that although there is this sort of information for the South Saskatchewan River Basin, an estimate of actual water use for other basins has not been determined.

These values represent comparisons to long-term averages. During dry periods when flows are low and consumptive demand for water is highest, the percentage of water diverted as compared to natural flow can be much higher. Since Alberta is obligated to pass 50% of natural flows to downstream jurisdictions, there are concerns that the South Saskatchewan basin has reached its water allocation limit, with certain sub-basins already over-allocated. This was one of the key reasons for the development of Water For Life, the province's Water Strategy. The "first in time, first in right" principle contained in legislation means that licence holders are entitled to keep their allocations in perpetuity unless they sell or transfer all or part of their allocation. As shown in the table, the intensity of licencing in most basins is much less, generally 6% or less of the natural flow. As demonstrated by the South Saskatchewan data, net consumption is considered to be even smaller. Since these percentages represent the major river basins as a whole, individual sub-basins could be more or less intensely allocated, depending on the specific area.

Groundwater allocations and estimated consumption
A similar table can be constructed for total groundwater allocations with an upper estimate for consumption obtained from licence information. It is cautioned that because a large proportion of the groundwater use in the province is for rural household (domestic) purposes, those uses fall below the statutory licensing limit under the Water Act and therefore are neither reported nor require a license. Therefore, actual groundwater use is likely higher than indicated by the table. In general, both total allocations and potential consumption are small compared to probable supply in most basins, based on estimated annual aquifer recharge by precipitation. By this measure, the Beaver River basin is likey the most licensed for groundwater based on the estimated sustainable supply.