Under current case law if you nationalized (state-ized?) water rights in a prior appropriation state it would be a kind of eminent domain and there’d have to be compensation.

Eminent domain followed by an automatic lease for the value of the rights over whatever period these things are valued at? Would that work?

Farmers could quit farming and sell their rights by the year.

I don’t follow the automatic lease part of your proposal, sorry.

To avoid having to directly pay out to the owners of the property the state can lease the water rights back to the farmers. This way everyone’s unhappy but we escape the status quo and aging farmers could live off the water rights.

I see. You use the time value of money to reduce the total cost by giving back the near term years and only “really” buying from x years out. Clever!

What’s more valuable, water, or cash?

Sure that’s the right plan but who’s going to do it? Remember that there is no Left in the USA.