What does 'the market rate' mean for all the infrastructure (I guess most of the agriculturally interesting surface water has been diverted under existing regulation)?

I don't mean that in a snide way, I just wonder what exactly you mean. Like, would it be okay under this market system for someone to purchase a large amount of the land where the water originates and construct a huge dam+reservoir? Would adjacent property owners have to go to court to redo the resolution of their competing interest in water that happens to flow across the properties?