Additionally, while some water issues are over very large areas (eg, piping water from Colorado River to LA) lots of places have far more local water issues, where a given aquifer or reservoir provides water to a single city (but no agricultural users) and lawn watering really is a major drain on that local resource.
That said, yes, the situation in California is a mess in large part because people are growing ridiculously water-intensive crops in the desert because someone in the 1800s acquired senior water rights which our government granted in perpetuity.