Colorado is known as "The Headwaters State"  because it has eight major river basins, several aquifers, and several important rivers rise in its Rocky Mountains; the majority of its water supply comes from snow in the Rockies and the snowmelt flows into rivers both east and west of teh continental divide.
The state of Colorado is a headwater state, which means that many rivers in the western and midwestern United States originate in Colorado. Colorado has eight major river basins and several aquifers. The majority of the water supply falls as snow in the Rocky Mountains. Colorado is known as the "Headwaters State" because several of the West's most important rivers rise in its Rocky Mountains. The continental divide traverses the state, causing snowmelt-filled rivers to flow toward the Pacific Ocean on the west side of the divide and the Atlantic Ocean on the east side. 
