Answer: Sedges do grow naturally in damp areas and would not, in my experience, survive in the better drained conditions of a typical yard. There are some experiments being done with different low growing native grasses (ie prairie plants) to see which ones might thrive in a lawn situation and/or under difficult conditions such as drought (with lawn being considered about six shaggy inches tall when left unmowed.)
Unfortunately, prairie ground, when you think about it, is generally totally different from the acidic and/or clay-based soil as one might typically find in CT. So what might be perfect in Nebraska is not necessarily going to be appropriate in CT or California or Texas. The research is exciting though.
And the idea is a powerful one. I am not sure that kind of six inch height in a grassy texture will meet most people's expectation for a lawn substitute or satisfy typical suburban property associations. At this point it seems more practical to begin limiting lawn areas to those that are necessary (need can, for example, be for play space or for entertaining space or for specific visual design element in some cases, however often these areas are actually at least as useful if not more so when done in a harder semi-permeable surface such as flagstone.) Remaining square footage of open area could then be planted with other types of low growing plants such as ground covers which would provide a visually low open green area but not require the mowing, feeding and other maintenance of lawn.
Plant selection would depend on the growing conditions in your location. For instance, a hot sunny open area with well drained soil could be planted in carpet height junipers while a shady area under tall trees with dappled light and somewhat dry soil could be planted in the the traditional evergreen carpet of flowering Vinca minor. A shady bank would be done in English ivy, a shady low spot with moist soil in ferns or lily of the valley, and a sunny bank could be planted in creeping phlox or thymes or low growing sedums.
In some cases taller plants are used, such as black eyed-Susans or even mass plantings of shrubs, if a low planting is not strictly required. One of the goals of this type of planting is to avoid monoculture situations where pest or disease problems can run out of control, and to use plants that are generally easy to grow but perform well and look good all year long.
The secret to success is to select plants that are well suited to the soil, the moisture, the light, and the typical winter temperatures and any other special considerations such as wind or seasonal runoff. These will then be healthy and perhaps even colonize naturally, or naturalize, to the point where they need no help from you to get along.
If you are interested in replacing some lawn area with other plants, I would suggest you begin by consulting with your county extension and local nursery personnel and perhaps park-based naturalists to see what they might suggest as alternatives. You will probably need to start with some basic soil tests, and they can help you with those and interpreting the results. (Late summer is a good time to run these as any soil preparation can then be done in the fall so you are ready to plant in the spring.)
The other "secrets" to success with this, besides selecting the plants wisely, are to prepare the soil and care for them during their establishment phase. So in some ways, it is not really as low care as one would hope in the beginning. In the long run, however, it should be in theory make a big difference.
If your primary reasoning in looking at alternatives is to reduce the chemical and water use for a typical lawn, it is always an option to look at the lawn in terms of minimum input and not in terms of the lawn care company's bottom line.
There is certainly research being done on lawn grasses that are better suited to low-input situations than the traditional high maintenance bluegrass. Your local extension resources would be familiar with which varieties should do best in your localized conditions as well.
Very often lawns are over fertilized which results in overly lush growth. This in turn is more susceptible to insect and disease attack, requires more frequent mowing and more water to support it and more chemicals to treat it. Often too, treatments are applied routinely without regard to actual need.
Finally, our image of a "good" lawn is perhaps not as realistic as it could be. Way back when, a lawn was essentially pasture chewed off short by sheep. Not so many plants can survive such steady clipping, but grasses can. A lawn that is mowed often and fed once a year on Labor Day can serve its purpose and look presentable -- at least in the old fashioned sense.
In general care terms, it is important to mow it often and high (three inches in summer) to minimize stress -- once a week is not often enough in the spring when the lawn grows very fast. Frequent mowing encourages sturdy growth.
Any feeding, liming or other treatments should be done purely on the basis of need as indicated by soil tests. As indicated above, you can also try to select a better suited variety of grass. There is no rule of thumb or set schedule, as every yard will be different.
Watering is not usually necessary if you are willing to allow your lawn to go dormant in the heat of the summer. In some instances where lawn is being grown on what is essentially subsoil of a suburban development the roots can't grow deep enough to withstand estended dry weather and the lawn will die without water. This is perhaps a separate issue, where initial soil preparation was not done correctly and the lawn is unable to cope as a result.
Weeding is not usually necessary (healthy lawn will choke out most weeds) unless you are looking for a putting green kind of perfection, and this comes at only a higher cost in chemical controls. So, there are always tradeoffs.
I hope this helps you think about more alternatives and how to pursue some options.
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