Zone the small yard into three different areas based on water necessity: very low water use, low water use and moderate water use. This helps with plant placement.
Establish landscape plants with very low-water use in the driest areas of the yard. Plants that thrive on very little water include agave, palo verde and ocotillo -- and these three plants also add color to the yard.
Choose plants that fit best with low water use. Water this area from time to time, in addition to rainfall. Add color to the yard with groundcover like lamb's ears or snow in summer. Additional drought-resistant plants include yellow alyssum, Shasta daisies and lavender.
Decorate walkways or up against the home using ornamental grass, which are hardy and require little water. Ideal varieties include prairie dropseed, Elijah Blue fescue and feather reed.
Plant an area in the yard that requires more water than the rest of the landscaping, to preserve water. This spot is ideal for a vegetable garden, floral patch or recreational area. Add color to the home by planting yellow cups, Arizona poppy, desert pincushion or brittlebush.