Switchgrass does not need a lot of water, that is one of its' many great attributes. It does not need fertilizer, and it's far better for the soil than any of the grain crops that are grown in the U.S. and are depleting the aquifer (of course, as the climate changes, and rain patterns evolve, maybe water in the midwest in the summer won't be an issue - right now it's flooding in the midwest, very unusual for this time of year I was just told).
Because of the subsidies the US govt pays, we usually have a surplus of most grains. There is also a lot of farmland that is idle, due to the govt paying landowners not to grow crops. If the use of biofuels increases, of course, we will need lots more space, but maybe not. For instance, there is research being done on creating biodiesel from algea - which would be grown in the desert, and yield hundreds times more gallons per acre than the best oil producing plants.
For over 130 years, there has been no real competition in the energy industry, relative to new technology. As new companies get in the energy business via biofuels, they will bring a new mindset, one that thinks they must create better products every year, and not rely on lobbying and politicians to protect their business. In the technology world, this is ingrained in most companiy's DNA - come out with new products or go out of business. We've been using the same gasoline for over 100 years, and all that has changed is where we get the oil from. A switch to biofuels will end that archaeic way of doing business, as competition will deliver more efficient energy systems.