It might not get resolved at all. The tendency in Canada is not to litigate, of course. There is a remarkably sparse history of interprovincial litigation--or, for that matter, federal-provincial litigation. That's partly because of the nature of our Constitution. Unlike the United States, we don't have a Supreme Court that has original jurisdiction over disputes between different levels of government. That's one of the reasons why we have never developed a history of litigation that would resolve some of these issues.
In the United States, for example, many of these water issues have been litigated for well over a century now. Some principles have evolved. In Canada we just don't have that history of litigation. There's the interprovincial cooperatives case, which didn't say very much. That was not a case of the federal government getting involved, although there was sort of a suggestion that maybe they should have been.
How would the federal government be involved? Of course it could be invited in. But that's not something the provinces typically do with respect to the federal government, I think.
One of the most useful suggestions that I have seen in terms of asserting a general federal role as opposed to dealing with this on an ad hoc basis was offered by the Pearse inquiry, which was almost 25 years ago now. It suggested that the federal government pass legislation that essentially would make it the default place to go if provinces just could not agree on an interprovincial water dispute. The system there was sort of a staged situation: you would have attempts to reach an agreement, and, ultimately, if they failed, arbitration.
I should say that arbitration, given the Canadian context, would probably never take place, just as the provision for dispute resolution, the ultimate hammer in the prairie provinces agreements, which is the Federal Court, has never been used. The very possibility of having that tends to mean that you'll push the parties to an arrangement that accounts for both interests as opposed to a possible result that no one would like from an arbitral tribunal or from the Federal Court.