Agave uses a metabolic technique that greatly reduces water loss. The plant uses a process called crassulacean acid metabolism (CAM). In CAM, a plant stores carbon dioxide absorbed at night, then uses it during photosynthesis in the daytime.
By inhaling carbon dioxide only at night, agave can keep the opening on their leaves, called stomata, closed during the heat of the day. That saves a tremendous amount of water compared to crops like corn, a C4 plant.
The CAM process is also what allows agave to use higher levels of CO2 than crops like wheat, barley, and potatoes, which are known as C3 plants.
Agave could reduce the food vs. fuel debate as well. Agave grows in areas where corn would wither and sugar cane would shrivel. It's adapted to nutrient-poor, arid lands, so growing agave doesn't compete with food and fiber crops. Though the price of agave ethanol fuel will probably never compete with tequila, there is currently an excess of agave production in Mexico that could be used as energy crops, according to Hector Nunez and his colleagues at the University of Illinois at Urbana-Champaign.