Hoover Dam is now just 37 percent full, and is headed for a first-ever official water shortage and continues to sink toward its lowest level since it was filled.

It stands tall more than 700 feet above Black Canyon on the Arizona-Nevada state line and holds back the waters of Colorado River, according to a USA Today report.

As Hoover Dam's water supply continues to decline, cities and farmlands are threatened, showing new risks of managing a water system in the desert Southwest.

Mike Bernardo, a Bureau of Reclamation official, creates power generation goals and a monthly report with the latest forecasts of how reservoir levels will change over the next 24 months.

Bernardo says that due to how dry things have been, they have been seeing Lake Powell's levels dropping.

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Water Shortage

The latest projection shows that Lake Mead will decline below an elevation of 1,066 feet, far below the threshold, by the end of 2021.

The federal government officially declares a shortage if it falls below the threshold of 1,075 feet.

The water shortage is expected to happen in August, which would prompt large water cuts to date for Arizona, Nevada, and Mexico.

More than 50 percent of Arizonians will be affected by the water shortage, according to The Hill report.

In addition, Arizona is experiencing an extremely dry season, with 99 percent of the state of Arizona in drought last month.

Meanwhile, water agency officials say they are confident their preparation measures will allow them to last cuts if the drought stays as expected. Their measures include conservation and searching for alternative sources, according to a Los Angeles Times report.

Arizona Department of Water Resources and Central Arizona Project officials said that the studied projection is not a surprise, although significant.

They added that it shows the effects of the dry and warm conditions across the Colorado River Basin this year.

Colby Pellegrino, director of water resources for the Southern Nevada Water Authority, assured consumers that there are measures in place to mitigate the effects of supply cuts.

Pellegrino added that more action was needed.

Len Schilling, a dam manager with the bureau, said that they added wide-head turbines, allowing the dam to operate more efficiently at lower water levels.

Schilling, however, added that less water through Hoover Dam meant fewer hydropower supplies.

Drought Contingency Plan

Representatives of seven Western states and the federal government had closed a landmark deal, which includes potential cuts in water deliveries through 2026 to reduce the risk of river's water levels declining critically, according to an Arizona Central report.

Federal Reclamation Commissioner Brenda Burman said that all the states should be lauded for finding a path forward.

Burman described the deal as historic, adding that it puts an important new chapter to the rules to manage the river.

Global warming has widely affected the river over the past few decades.

Scientists said that they found out half of the decreasing water trend from 2000-2014 was the result of the rising global temperatures.

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WATCH: USA: Western states may declare water shortage for first time as reserves low at Hoover Dam - from Ruptly