One thing they should do is increase the cost of water utilities and make it more progressive in the sense that heavy usage incurs a steep increase in cost/gallon.

For instance, Spotsylvania County VA (where we live) is one of those fast-growing counties with new (over)development with McMansions and new houses in the NW part of the county. What they've done for residential customers is just what I described above. The rate is really cheap for the first 2000 US gallons a month ($1,15), then it increases steeply in brackets so that if one uses more than 12000 US gallons, the rate skyrockets to $8,48/gallon. Ditto for the sewage fee, costs are similar.

In effect, the county charges those new, big houses with big yards more for water because the inherent water usage is much greater in an expensive, large house than the typical rural ranch house which dominates in the countryside.

Making water much, much more expensive for higher usage rates will (hopefully) induce owners to conserve water and not run their sprinkler systems 2x a day.