Experts and BHG readers answer.
drought tolerant lawn or lawn replacement:
Buffalograss has become a relatively popular low-water use lawn grass. Seed or sod may be available.
There are also many drought-tolerant groundcovers that withstand some foot traffic. Various thymes, woolly yarrow, sedum, dianthus, and creeping veronicas are possibilities. The current issue of Landscape Solutions has an article on no-mow groundcover substitutes for lawns. Check it out on newsstands.