Water in the South West of the US is always a worry. It's mostly a desert, and in Southern California imports water from Northern California and the Colorado River. And the population keeps on growing, and the supply of water stays the same.
One solution would be to allow farmers to sell their water at market prices to cities. Farmers basically get the water for free. Due to politics, that is not going to happen.
Another solution is recycling water as the Wall Street Journal article Sewer to Spigot: Recycled Water. Some cities are using recycled water for golf courses and such. If you see a purple pipe, it's recycled. Other water agencies are replacing toilets with lower water usage solutions. My almer mater put in waterless urinals. A big use of water is our beautiful green lawns in Los Angeles. A lot of water is also wasted in irrigation through evaporation, but again politics gives no incentive for improving this (the what's in it for me angle).
LA prepares massive water-conservation plan per the LA Times. Home irrigation systems with water sensors is an opportunity for companies such as RainBird. I interviewed there, interesting culture and way of doing things. Most homes still have time watering systems. An opportunity for new homes is using recycled water for flushing toilets. Inside the house, low flow shower heads, faucets, and toilets through regulations have already reduced water usage.
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