AZ HB2320

Adds "watershed health uses" as a permitted beneficial use of water, defined as water conserved in natural watercourses that supports watershed health attributes identified in a required director's report.

Authorizes the Arizona Game and Fish Commission to acquire and lease surface water rights for watershed health uses and instream uses.

Requires the Director of Water Resources to issue a report every three years assessing the overall health of each Arizona watershed based on hydrology, landscape condition, habitat condition, geomorphology, water quality, biological condition, and threats to the watershed.

Permits the Arizona Game and Fish Department to appropriate unappropriated water for watershed health uses and allows the state and political subdivisions to file instream flow applications for such purposes.

Modifies water transfer provisions to allow severance and transfer of water rights for watershed health uses and clarifies that instream flow applications can be filed for watershed health purposes.