Southwestern states won’t take a hit next year to the Colorado River water that serves cities, agriculture, and development—but the outlook is bleaker in 2020, according to new federal projections.

The outlook released Aug. 15 by the U.S. Bureau of Reclamation buys time for water managers in Arizona, Nevada, and California negotiating a deal alongside the federal government to protect Lake Mead from a shortage declaration. A water level below 1,075 feet in the human-built reservoir near Las Vegas...