While attending grad school in Arizona I became very aware of just how crucial water issues are there. All the water comes from the Colorado River and everyone is laying claim to it. Someone once said that in the future wars would be fought for water instead of oil. This fear may soon be realized in Arizona and other areas of the southwest.
A statistic that I found while researching my thesis on Conservation Gardening is that in the southwest 60% of available water is used for irrigation. This is a very scary statistic, and totally unsustainable.
I think it's a great idea to begin to harvest rainwater for irrigation uses, but the idea of a lawn in this area is simply ridiculous, but many still try. Colorado has actually banned the harvest of rainwater because it is desperately needed to recharge the greatly depleted aquifers, but I think there is some effort to lift this ban now.
Wiser landscaping practices that are centered on locally native plants would go a long way toward reducing the amount of water used for irrigation. Water use Arizona is developing into many interesting discussions, and I'm fascinated to watch it unfold.