Flagstaff, Ariz. — At the Colorado River on the Utah-Arizona border last week, recreation enthusiasts and officials of the Del Webb Corporation threw an elaborate birthday party for the 710-foot-high Glen Canyon Dam.
Billed as a salute to the Bureau of Reclamation project, the 20th anniversary , keynoted by Interior Secretary James Watt, was really a celebration of what the dam created: 1 million kilowatts of hydroelectric power; a controlled flow of a formerly wild and irregular river; the city of Page, Ariz.; and, preeminently, Lake Powell, a 186-mile-long reservoir that has become one of the top tourist attractions in the West.
''It (the dam) has tamed the waters,'' Secretary Watt told an audience of 400 in Del Webb's Rainbow Room. ''What would this area be without water? That is the purpose of the Bureau of Reclamation: to reclaim the West for people.''
Not everyone agrees. Nearby, as Mr. Watt addressed reporters at the anniversary luncheon, 100 protesters from the environmental group Earth First! mourned the loss of Glen Canyon by conducting a mock funeral.
The debate over Glen Canyon Dam, however, goes deeper than a confrontation between environmental preservationists and the supporters of reclamation and motorized recreation. At the heart of the dispute are varying views on the wisdom of depending on the Southwest's key water resource, the Colorado River, to support the region's development.
''In the 1990s,'' Watt told his audience, ''the most serious domestic crisis that we will have in every region of the country will be water shortages. The flooding of Glen Canyon is a cost to society. And I think the benefits far outweigh the cost.''
Lake Powell and other reservoirs along the lower Colorado are, to Mr. Watt, insurance policies for Sunbelt growth. But some experts point out that the river is already ''overbooked.'' Seven Western states and Mexico have legal claims to what amounts to about 110 percent of the river's annual flow. In 1922, the Colorado River Compact divvied up the water based on an estimated flow of 15 million acre-feet. (One acre-foot is an acre covered by a foot of water - more than 325,000 gallons.) But the actual flow has averaged 13.8 million acre-feet a year since 1922, according to the Bureau of Reclamation.
''The trend we're seeing now,'' said Robert Lippman, Southwest representative of Friends of the River, ''is going to culminate in a tremendous ecological and environmental disaster for the Southwest when the water runs out. It is running out now and it is just a matter of time before it becomes a true crisis.''
Western states still have not felt the pinch. But that may change in 1985, when billions of gallons of Colorado River water are scheduled to be sent 300 miles to Phoenix and Tucson for the Central Arizona Project.
The $3 billion CAP, built to replace water now taken from Arizona's dwindling groundwater supply, is authorized to divert 1.2 million acre-feet each year from the Colorado. When the CAP dips its straw into the river, the 7.5 million acre-feet allocation for the lower Colorado basin states - Arizona, California, and Nevada - will have reached its limit.
California, which is now taking more than its 4.4 million acre-feet allocation, will have to look elsewhere for excess water. But the upper-basin states (Colorado, Utah, Wyoming, and New Mexico), which on paper are also guaranteed 7.5 million acre-feet a year, will be the big losers.
''There's no way the upper basin can develop its 7.5 million and still fill its commitment to the lower basin (and Mexico),'' said John Burke, a Bureau of Reclamation engineer at the Hoover Dam on the Arizona-Nevada border. ''This means the upper basin is limited in terms of growth. They don't want to be limited.''
Other Bureau of Reclamation officials point out that the shortage is still on paper. One estimate says the demand for Colorado River water in the upper basin states will not exceed what is available until the year 2040.
''That's a long time from now,'' said Wayne Cook, a water conservationist at the bureau's Salt Lake City regional office, ''and far beyond our clear ability to predict. A lot of things can happen in 60 years.''
Some officials view the CAP in similar terms. While the project appears capable of delivering its full allocation during normal years, a severe, prolonged drought could cut off the Colorado supply and leave Phoenix, Tucson, and other desert areas in central Arizona without a major source of water.
''There's a good chance that there's going to be a good water supply (in the CAP) for a long time,'' said Hoover Dam's Mr. Burke. ''In 50 years, if I was to predict . . . I just wouldn't want to say one way or the other.''
To environmentalists, this is a shaky foundation on which to foster growth in the Southwest, which is largely desert.
''Americans have yet to tackle the cumulative problems in terms of the entire Colorado basin's development,'' says Mr. Lippman. The problems, he says, are ''based upon an erroneous assumption and false optimism that the river could provide for virtually unlimited development. The Colorado River cannot possibly deliver the water that the basin states have come to feverishly depend upon for future maintenance and development.''
But to many supporters of reclamation, it would be wrong not to build the Southwest with the waters of the Colorado.
At Lake Powell last week, Secretary Watt praised the foresight and courage of those responsible for the Glen Canyon Dam, and then asked his audience: ''Do we have the intestinal fortitude to make decisions of comparable commitment? So that in 20, 30 years, another gathering of 400 people can be held, and the speaker can say: 'Thank God, that in the 1980s, there were men and women who would take the abuse of public opinion and commit the resources of America, so that we might have an enhanced quality of life!' ''