Water is essential for wetland function and sustaining migratory networks for wetland wildlife across broad landscapes. Groundwater declines and surface flow reductions that impact aquatic and wetland organisms are common in the western U.S. and increasingly in the eastern U.S. Agriculture is the largest consumptive water user in the U.S. and understanding economic incentives of water-use practices and the legal context of water rights is foundational to identifying meaningful water solutions. In this paper, we provide a brief legal overview of water rights in the U.S. and synthesize the literature to provide a broad overview of how federal farm policy influences water-use decisions. We conclude that the ultimate cause of many water-use conflicts is an inefficient, farm economy that is driven by several proximate factors, of which outdated water laws and subsidies that encourage increased water use are among the most important. Development of multi-scale water budgets to assess project impacts and by working more intensively at local watershed and aquifer scales can improve conservation efforts. Finally, detailed analyses to understand and minimize the impacts of specific federal policies on agricultural water use would enhance water conservation efforts, facilitate long-term food and water security, and provide greater protection for wetland and aquatic resources.