Jason:
It does have, by far, the most water in play of any of my designs. However, on some of the holes (11, 13, 15, 18) you would have to hit a pretty bad or pretty poorly thought-out shot in order to get wet. On other holes the water is really in play.
Nearly all of the water hazards were left behind from the mining operation that had occupied the site before the golf course, so we had little choice but to use them as a primary part of the design. They don't maintain it nearly as firm and fast as I would like to see, but that has nothing to do with water table issues -- the water table has gone down 2-3 feet since we built it. It only has to do with them growing puffy bentgrass fairways because they think that's what golfers from Chicago like.
There are some holes which don't have a ground game option because of all the water; there are others where it exists in theory but seldom in practice because of the playing surface. Really, though, the strategy at Lost Dunes is all about its greens, and if you haven't seen them you don't know what you are missing.