The San Juan Mountains and Ute Mountains bound the watershed on the north, the Jemez Mountains lie to the east, and various upland and mesa areas of the Colorado Plateau to the south and west. The San Juan Basin is a distinct area of the San Juan River watershed; it is a geologic structural basin known for its abundant fuel resources. The San Juan Basin is roughly coterminous with the southeast quadrant of the San Juan River watershed in northwest New Mexico and southwest Colorado. The watershed as a whole is very arid, with average annual precipitation just shy of . However, precipitation can be as high as in the mountains at the headwaters of the San Juan River; a considerable portion of this falls as winter snow. In desert areas, most of the annual precipitation is generated by intense rainstorms during the peak monsoon season of July and August.