Here's the problem:
Water conservation in urban areas doesn't make sense if there's no recycling of wastewater, since any "savings" eventually gets stretched across a larger population (or other uses). It's necessary to reduce net diversions if conservation is going to have an environmental benefit.
Conservation in areas with agricultural irrigation is exactly the same, more crop per drop leads to more acres of crops. The only way to reduce diversions from the environment is through fallowing or a switch to different crops.
Given these facts (applied to both surface and groundwater), it seems that the easiest way to induce conservation that leaves more water in the environment is to charge for net diversions. Water managers/stewards could then find the right mix of policies to put that water to highest and best use.
Those policies may result in low flush toilets, dead lawns or shorter showers -- or they may not. All that matters is the net water flows.
Bottom Line: Water conservation affecting one step in a multi-step flow is unlikely to be efficient; it may even be useless or counterproductive.