Have you considered an alternative to grass? Turf grasses are usually about the thirstiest plants out there (probably because they take up so much area). In some areas of California, for example, they actually use a succulent of some sort (not sure what it was, my visit there was brief) to cover the ground near the freeways because it uses a lot less water and maintenance. also, people in the desert southwest of the US rarely use grass. A search on homes for sale in that area (such as Phoenix, AZ)turns up photos of a lot of interesting alternatives. It seems a bed of river rock with trees and cacti seems to be the most popular, and they look good and still provide shade.
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