The healthy snowpack whitening Colorado’s mountain peaks has given water officials some breathing room to manage the Colorado River Basin’s ongoing drought. The challenge will be not to squander it.

As winter storms wind down, water managers and policymakers are mulling over decisions about how to release and retain water in shrunken reservoirs across the basin, which supports 40 million people across the West. This year, many Colorado reservoirs will have the chance to refill, but the situat...