Although there are multiple causes of the water scarcity crisis in the American Southwest, it can be used as a model of the long‐term problem of freshwater shortages that climate change will exacerbate. We examine the water‐supply crisis for 22 cities in the extended Southwest of the United States and develop a unique, new measure of water conservation policies and programs. Convergent qualitative and quantitative analyses suggest that political conflicts play an important role in the transition of water‐supply regimes toward higher levels of demand‐reduction policies and programs. Qualitative analysis using institutional theory identifies the interaction of four types of motivating logics—development, rural preservation, environmental, and urban consumer—and shows how demand‐reduction strategies can potentially satisfy all four. Quantitative analysis of the explanatory factors for the variation in the adoption of demand‐reduction policies points to the overwhelming importance of political preferences as defined by Cook's Partisan Voting Index. We suggest that approaches to water‐supply choices are influenced less by direct partisan disagreements than by broad preferences for a development logic based on supply‐increase strategies and discomfort with demand‐reduction strategies that clash with conservative beliefs.