George Richard, a retired Air Force colonel, was annoyed at how much time and effort he was expending to keep his lawn looking lush and green.

He was bothered by the cost of giving his grass the long soakings it needed to survive Tucson's long, dry and intensely hot summers.

So last year, Richard took the most significant step toward water conservation that any homeowner can take in the desert Southwest.

He ripped out his grass and replaced it with a layer of tiny fragments of decomposed, rose-colored granite. He uprooted his thirsty cypress and boxwood trees and planted Chilean mesquite and prickly pear cactus in their place. He discarded his old garden hose and sprinkler and installed an underground drip-irrigation system, which metes out small amounts of water only where they are needed.

In short, he stopped pretending he was living in Seattle or Houston or Philadelphia, where 40 or 50 inches of rain fall every year. He came to terms with the fact that he was, after all, living in the desert.

"Most people move here from other places," said Richard, 49, who came from Missouri, "and they want to see green in their yards. It's so futile, and they miss so much. The natural palette of desert colors is so nice. You can design such fascinating color contrasts with desert plants and rocks. That's why more and more people in Tucson are shifting to desert landscaping."

The people of Arizona's second-largest city -- people like George Richard -- have shown the rest of the state and the rest of the nation that the term water conservation can be something more than a meaningless platitude. tAnd what has happened in Tucson bodes will for the rest of Arizona and the entire Southwest.

Arizona, after all, can lure jobs and new residents from the Frost Belt for only as long as it can ensure that there is enough water for them. It is a state that in terms of water consumption has been living beyond its means for years, a state where the water supply cannot possibly keep pace with population growth.

Tucson residents now are trying to see to it that the Southwest's boom does not wither from a lack of water. In the last five years, per capita water consumption has fallen nearly 30 percent in Tucson, thanks in part to an imaginative, high-profile conservation program launched by the city water department. The average Tucson resident today uses about half as much water as his counterpart in Phoenix, the bigger city two hours up the interstate.

"This is a very water-conscious town," said Tucson water director Gene Cronk, noting that Tucson is one of the few major American cities not situated on a lake or a river, a city that relies entirely on ground water for its survival. "The recognition of the desert is deeply ingrained in a lot of our people."

Arizona's water supply will expand about 14 percent by the end of the 1980s with the completion of the massive Central Arizona Project, a $2.1 billion maze of dams, pumps and aqueducts that will deliver Colorado River water to the state's population centers. But that's all there is, all the water there there will ever be, at least for the foreseeable future.

Meanwhile, the state's population, which now stands at 3 million, will keep growing, doubling in the next 30 years, maybe even tripling if -- as suggested by former President Jimmy Carter's Commission for a National Agenda -- the federal government writes off the old cities of the Northeast and encourages Americans to move to the Sun Belt.

The new migrants to Arizona, however many millions of them there turn out to be, will presumable expect to be able to take showers and flush their toilets.

For that to be possible -- without risking the catastrophe of actually draining the underground reservoir, or water table -- the old residents of the state will have to use less water, much less.

"It's not going to be easy," said one official in Phoenix. "The lifestyle in our city is green lawns, blue swimming pools and frothy white fountains."

Some observers, such as the futurologists from New York's Hudson Institute, have concluded that talk of Arizona running out of water is "scare" talk, nothing more.

They base their rosy projection on the old Western proverb that "water runs uphill to money," the idea that developers will buy out farms, thus securing enough water for thousands of new condominiums -- complete with golf courses, swimming pools and Jacuzzis.

But the water experts on the scene here are not quite so optimistic.

"I think the resource that will poop out first is water," said Wesley Steiner, the state's water czar.

"We know that water will become a restraining factor on population at some point in the future," said Cronk, the Tucson water chief. "But it can be dealt with rationally, without hysteria or gloom and doom. How well we learn to conserve water will have a lot to do with where we have to draw the line on growth. The rising price of water will encourage people to conserve, too."

Indeed, the conservation that has taken place in Tucson has a lot to do with money.

The story of water conservation here began in June 1976, when the City Council voted 4-3 to increase water rates by 22 percent. The local citizenry was enraged. Overnight, a movement sprang up to recall the four councilmen who had done this deed.

"They've sealed their own coffins as far as their political careers are concerned," said the recall organizer.

Tempers ran high. One man staked a huge sign on his front lawn that read: "I am dying -- 4 councilmen did it." The message was signed, "Grass."

The four councilmen were thrown out of office by a 2-1 vote, and four new councilmen were installed.

But the new councilmen quickly discovered that a substantial rate increase was necessary and that a much larger one might be required. The population of Tucson was growing, and the water distribution system would also have to grow -- at a cost of $155 million -- unless some thing could be done to reduce the peak use of water, the amount used on the hottest summer afternoons.

Out of that political and financial crisis came "Beat the Peak," a program promoted on television by spots featuring the likes of Robin Williams, Richard Pryor and Phil Donahue.

Beat the Peak focused on the watering of lawns, much the largest single use of water by residential customers. Homeowners were told that during the summer they could water their lawns only on alternate days and never between 4 p.m. and 8 p.m. It was simple, and it was catchy.

"It was designed as a peak management plan, not a water conservation plan," Cronk said. "It was designed to conserve money, not water."

It ended up conserving both. By reducing peak demand, it rendered that $155 million capital investment unnecessary. And it trimmed water consumption year-round.

The summer limitations on lawn-watering -- were combined with a rate structure that penalized high usage, especially in the hot months -- encouraged people like George Richard to tear up their lawns and replace them with imaginative desert landscapes.

Now Beat the Peak has begotten "Slow the Flow," a new program encouraging water conservation inside the home, winter and summer. The new program suggests that residents take shorter showers, prevent and repair water leaks, shut off the tap while brushing teeth or shaving, wash only full loads of laundry and install shower-flow restrictors and toilet dams, which are available in a free Slow to Flow kit.

Such steps, if adopted statewide, would at least put off the day when Arizona has to hang out the "No Vacancy" sign. So would increased conservation in agriculture, since farming will continue to account for the vast majority of the state's water consumption for years to come.

"We're not exactly wastrels right now when it comes to water," said Cecil Miller, president of the Arizona Farm Bureau.

Many water-saving measures have been taken on the farm. Many farmers are lining canals with Gunite, a concrete mixture designed to prevent water from seeping into the ground on its way to the corps. Others are using laser to level their fields, reducing the slope or irrigation ditches so that; less water is wasted.

In addition, scientists at the University of Arizona are experimenting with new crops that unlike cotton -- the state's largest crop -- do not need much water.

So far, some farmers have been hesitant to change. But change they must if they intend to survive very far into Arizona's future, into a time when water will grow increasingly scarce and expensive.

Most water experts believe that the state has a good chance of easing into its tight-water future without excessive trauma. If trauma looms, then more exotic options would have to be explored.

There is, after all, plenty of water in the West. It's just all in the wrong places.

Throughout the arid West, the Columbia River, which flows in rainy Washington and Oregon, is seen as the ultimate solution to all water problems, despite the incredible distance water would have to be transported and what all that would cost.

Residents of the Pacific Northwest are so afraid about other Westerners taking their water that Sen. Henry Jackson, D-Wash., has forced legislation through Congress prohibiting even the study of such schemes until at least 1988. But some Arizonans talk about it as a real possibility.

They talk of using riverbeds and canals to transport water from Washington through Idaho and Wyoming and then down Utah's Green River into the Colorado River. Or it could be pumped wouth through Oregon, into the Sacramento River in northern California, then into existing aqueducts for delivery to southern California and Arizona.

Should the Northwesterners succeed in blocking those schemes, Arizona and California could conspire to steal the water in a legal kind of way. They could put a huge underwater pipe in the Pacific Ocean, parallel to the coast but outside the three-mile limit, extending from California north to the mouth of the Columbia. There, the pipe would suck in the river water -- before it mixes with the salt water -- and carry it south.

A few Arizonians, especially those bitter about what growth has done to their state, see something like that happening again. One such Arizonan is author and naturalist Edward Abbey. He writes:

"Just about the time that Tucson and Phoenix conglomerate, the two amoebae becoming one United Blob, the Colorado River will be drained dry, the water table fall to bedrock botton, the sand dunes block all traffic on (Tucson's) Speedway Boulevard, and the fungoid dust storms fill the air. Then, if not before, we Arizonians may finally begin to make some sort of accommodation to the nature of this splendid and beautiful and not very friendly desert we are living in."