Earlier quoted context omitted.
Would conservations (like people giving up luscious grass lawns) be enough to sustain the population in the west? (In your opinion.)
Well, about 80% of water use (in the west) is for irrigation purposes. Ideally, making farmers pay market (and externality adjusted) rates for their water would discourage them from growing plants which need a lot of water per unit food (like alfalfa). We could get a LOT further with water-aware legislation for what farmers can grow (or if you prefer a libertarian viewpoint, have the government stop subsidizing water…
Also, is the problem really that the government subsidizes water. As I understand it, there is a naturally occurring aquifer that is currently being used at free market rates. We would need the government to tax this to reduce usage.