I've come to realize lack of water doesn't slow down population growth in Colorado. It only makes development more expensive because someone has to buy water rights away from farmers and change the use to residential use. There is an interesting bill being carried by state Rep. Mary Hodge (D-Brighton) that is going to make it easier for farmers to sell water to cities on a temporary basis and without also having to sell out the farm. There is a little bit of something for everyone here: growing cities get water, farmers can make money selling water without getting out of the business, and the rest of us don't have to put up with calls for new dams up in the mountains.
The math works like this: The average household (of four) uses something like two thirds of an acre foot per year (according to the Denver Water Board). The average farm in the United States applied 2.48 acre feet of irrigation water per crop acre in 2000. And that average is dragged down by the many comparatively wet states that don't need so much irrigation; Colorado's average is almost certainly higher (although I can't find what it is right now).
Another way of looking at it is this: Colorado agriculture uses about 5.5 million acre feet of water annually (according to a Word document I found on the Colorado Department of Agriculture site but can't link to). If all of that were converted to residential use, which of course will never happen, that's something like another nine eight million households that could be served. But if a million acre feet of water were converted from agriculture to residential use, that would allow another million and a half or more households to move in. That's six million people, or more than the entire current population of the state.
So you can see the economic pressures that are pushing Colorado farmers to sell their water for municipal use. Rep. Hodge's bill makes a lot of sense to me because it recognizes this dynamic while making it easier for farmers not to sell off their land, which encourages sprawl and reduces the state's agricultural production, at the same time they are selling off their water. The practical result could be more farming in wet years and less in dry years, which makes sense to me.