The proposal, titled the "consensus-based modeling alternative," was jointly submitted by Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming.
The proposal notably excluded California, the largest user of the Colorado River, which supplies water to 40 million people.
The Colorado River has long been over-allocated, but climate change has worsened drought conditions in the region and reservoir levels have plummeted over the past couple decades.
As the western U.S. experiences its driest two decades in at least 1,200 years, water levels in the country's two largest reservoirs, Lake Mead and Lake Powell, have reached record lows.
Sarah Porter, director of the Kyl Center for Water Policy at Arizona State University, said the states' proposal appeared to be a "very sincere commitment" to advance negotiations over water cuts and keep reservoirs from falling to dangerous levels.