Questions About Desert Composting

I am enjoying the therapeutic qualities in turning the compost pile these days. However, I have no clue if I am a good, responsible composter. At least it doesn't stink, so that's something!

Questions Specific to Composting in the Desert/ Tucson:
1. Has anyone figured out if this is really worthwhile, considering that I am having to water my compost pile with precious ground water every other day or so?
2. How do I know if I am keeping the pile moist enough? In general, how do I know if I am tending my compost pile correctly for maximum results?
3. Any tricks for keeping the pile moist enough?
4. What kinds of bugs and critters are normal to expect around a compost pile? I know I should be on the lookout for neighborhood cats, but is there anything else I should worry about? I've got lots of ants and other miscellaneous little bugs. I also noticed some weird chrysalises (sp?) They were about 1 1/2" in diameter, white with a red tip on one end, curled into a circle and looked nasty-- some kind of beetle or something? Hopefully not cockroaches? Ew.

I'll try to add photos to this post soon.