This isn't really relevant to anyone in the US east of the 100th meridian (except Texas) but for those of you who live in dry areas, please watch this video, as shared by Karen Russ on Google+:
So.... we dam up or dry up mountain streams, ship water hundreds of miles, devastate aquifers, kill salmon and render thousands of farmers unemployed for our urban water. We transport and filter it using an extremely energy-intensive process, then we dump millions of gallons of potable water (something most in the world don't even have access to) all over a 'crop' we don't eat, burn, or feed to animals. We maintain our lawns using machines that create a great deal of air pollution and consume fossil fuels. Then, irrigation water and other runoff from lawns ends up in local waterways, bringing with it fertilizers, pesticides, and other pollution. I remember hearing once that in the summer, most of the water in lower Malibu Creek in California can be tagged via isotope analysis as water from SNOWMELT - snow in the Malibu Creek watershed is a once in a decade event and generally amounts to a dusting to one inch. The water in the creek is from the Sierras, the Rockies, the southern Cascades... shipped hundreds of miles to end up, polluted, in a creek populated by species that are adapted to dry conditions and can't even use the water.
Lawns are wholly irrational and ridiculous, enact large social and environmental costs, and waste space that could be used for other things - vegetable gardens, micro-habitat patches of native plants, stream restoration, you name it! Oddly, it's done entirely via an odd form of adult peer pressure (sometimes legally enforced via ridiculous HOA regulations).
I understand it often isn't legally or socially possible to rip out your lawn. That being the case, we need to address this on a large scale, all at once. There needs to be a movement to remove all of the lawns of the West, except for shared sports fields and parks. If we don't do it now, we surely will have to do it later, during the next drought - and we'll end up with a bunch of brown, flammable grass everywhere instead of something better.
If you live in southern California, here's one resource for removing your lawn. Native plants are one great choice - cacti and succulents, or a vegetable garden, are also excellent choices. Replacing your lawn with pavement or a 'rock garden' of crushed gravel isn't really much of an improvement, as it creates severe runoff problems. You want soil... just not lawn.
Out east, there's plenty of water for lawns, but they still require a lot of maintenance and are a cause of water and air pollution. Consider a vegetable garden, a rain garden, wildflowers, or conversion back to a (managed) forest understory system. With the latter, you will have wildlife using your yard and can even generate a bit of sustainable firewood and perhaps maple syrup.