Depends what you mean. As far as the future of using most of your water for agriculture, including brilliant things like growing cotton in the desert, sure. However, given that non-agriculture use is only a fraction of the total water use, there's no reason other than politics and legal issues why the area shouldn't be able to easily support its population. The problem is that back in the twenties and thirties when they divvied things up, nobody lived there except for a few ranchers, farmers, and miners - and that's how it was allocated.
It's also why a full market pricing scheme with a small free per capita residential allotment would work well.
That's already how it works. The propery rights in water are all owned by somebody, and the owner can sell them or lease them as desired. Many farmers in eastern Colorado have sold or leased their water rights to new suburban water districts, for example. The effect of this is to return the land to the pre-Colombian dryland environment, suitable for low density grazing of bison--and windmills.
And while we don't have a free residential allotment, our city water rates are so low ($0.016 per cubic foot) that it doesn't really matter.
