Eminent Domain allows government to adjust such rights, just like it can just take your property to run a freeway through it.
The government can also tax it.
The government can also tax it.
Similarly, the courts have found that taxes intended explicitly to extort and take property are illegal.
If the city wants Walterbright's house, they can't just impose a 1000% property tax on you to avoid buying your house.
Currently there is a large conflict between three parties: government, environmentalist, and owners.
Ultimately I think private owners will increasingly sell out or lease their resource rights to the government.
This will leave the government to arbitrate the conflicts between human usage and human consumption.
My guess is that this will eventually take place under the existing systems of Rights and ownership in various States.
Whether you call this a collapse or simply a shift is just a matter of terminology.
My hope is that this will be a lawful transition where governments and people who want water buyout the interest and stake of those who currently own it