How can you genetically modify crops so that they require less water and land?

I don't know exactly how they do it but I know it can be done. For instance I work on a hay farm in south texas. We have a hybrid bermudagrass here that was planted about 8 years ago. Its called tifton 85. It is a burmudagrass because it is perennial( comes back every year and does not seed out). It was derived from common Bermuda grass or coastal grass. Tifton 85 has a broader leaf, it is more drought resisitent, it can handle hot hot temperatures through south texas summers, it has higher protein value, and it grows thicker and taller than coastal grass. Coastal grass only gets to be about 12" tall where as tifton if allowed to can get over two feet. Coastal grass at it's peak can make up to 5 round bales of hay per acre where as tifton can make up to 9.

SELECTIVE BREEDING & CULLING.......as has been done for tens of thousands of years...in every domestic species on the planet-plant & animal.

Nuclear reactor from an alien race. No, you cross breed species or something.

Google ARS (Agricultural Research Service), part of the USDA.  You may be able to find the article I read in their magazine several years ago about just what you're talking about.  They were trying to transfer the genes responsible for heat and drought tolerance in peppers into cucumbers, making them much more heat and drought tolerant.  That would allow cukes to be grown in areas that are presently too hot and dry or lower the amount of irrigation water required.

currently there are no GMO's developed to require less land and water. This seems to be the holy grail for biotech crop development.

Currently most GMO's are designed to be immune to certain herbicides, they have pesticide incorporated into each cell (Bt gene) and they can make certain pharmaceuticals such as inulin.

But thus far GMO's are not drought hardy and take as much or more land as non GMO crops.