The project was built, is owned, and is primarily operated by the federal Bureau of Reclamation under the Department of the Interior. By the late 1890s, farmers in northeastern Colorado realized water rights in the area had become over-appropriated. In order to survive the agricultural season, additional water supplies would be needed. Prior to the Dust Bowl era, agriculture in this section of the state had relied upon sources such as Boulder Creek, St. Vrain Creek, Little Thompson River, Big Thompson River and the Cache La Poudre River, all of which are a part of the South Platte River basin and flow into the South Platte River before the South Platte reaches Greeley, Colorado. In search of a solution, farmers and their representatives approached the Bureau of Reclamation. In the late 1930s a solution was found: divert the water via a 13.2 mile-long tunnel under the Continental Divide and Rocky Mountain National Park.
While the project was originally built for agricultural purposes, it serves multiple demands including municipal and industrial supply, hydro-power generation, recreation, and fish and wildlife. In recent years, however, water supply demands have shifted making municipal and industrial supply the main water beneficiary, rather than irrigation.
Today, the "C-BT" serves over 29 cities and towns in northeastern Colorado, including Fort Collins, Greeley, Loveland, Estes Park, Boulder, and Sterling, encompassed by 7 counties, providing a secondary source of water for around 720,000 people and an irrigated area of 620,000 acres (2,500 km²). Although water rights allow for up to 310,000 acre feet (380,000,000 m³) of water a year to be diverted, annual diversions average around 220,000 acre feet (270,000,000 m³), instead. A drop of over 2000 vertical feet from the Rockies down to the plains allows for power generation. Six power plants on the project produce an average supply of 759 million kilowatt hours of electricity a year. Like the water supply, generated electricity is supplemental. Electricity produced on the C-BT is a source of "peaking power" and is marketed by the Department of Energy via its Western Area Power Administration.
The water diversion involved is extensive and the project could not have been constructed without compensation to the West Slope for the water sent East. As a result, the first feature built on the C-BT was Green Mountain Dam and Reservoir, a West Slope facility designed to provide for future water demands in the state's Upper Colorado River Basin. The project was authorized by President Franklin Delano Roosevelt in 1937. Construction began on Green Mountain in the northern part of Summit County in 1938.
Construction on the project continued through most of the next 20 years. Today, ten reservoirs, and about 18 dams and dikes, the Alva B. Adams Tunnel under the Divide, as well as the six power plants, make up the project. Once the water emerges from the Adams Tunnel just southwest of Estes Park, the project is gravity fed, with only one exception: a reversible pump-generator unit that fills Carter Lake. Water falling through penstocks to the Flatiron Power Plant can either be moved to fill Carter, or used to generate electricity before continuing to travel north to Horsetooth Reservoir. Most water beneficiaries on the project receive their C-BT shares from either Horsetooth or Carter Lake reservoirs.