Why haven't land animals evolved beyond urination?
It is probably true that toilets and other resting-ish area are always a great place to think about biology, I agree $\ddot \smile$.

Why do we urinate?

In short, urine contains the waste from our blood while defecation is just the stuff that we haven't digested. Kidneys are the organs responsible for draining wastes (mostly nitrogen-containing, or nitrogenous, wastes) from our blood. 

Trade-off: energy cost vs. water loss

You're correct that the loss of water through urination is a considerable cost for an organism (especially those living in dry environments). But the amount of water used to excrete nitrogenous wastes is negatively correlated with the energy it costs to perform this excretion. In other words, there is a trade-off between water and energy loss during nitrogen excretion. Also, the question of toxicity is important.

Three ways to excrete nitrogenous wastes

Animals basically have three choices to excrete nitrogenous wastes:


Uric acid (excreted by uricotelic organisms)


Solid (crystal) with low water solubility
Low toxicity
Little water is needed
Lots of energy is needed

Ammonia (excreted by aminotelic organisms)


Highly soluble in water
High toxicity
Lots of water is needed to dilute it because of the toxicity
Not much energy is needed

Urea (excreted by ureotelic organisms)


Solid but highly soluble in water
"medium" amount of water is needed
"medium" toxicity
"medium" amount of energy is needed



What method is most beneficial for a given individual?

The amount of energy and the availability of water are very important aspects to understand whether a species is ureotelic, aminotelic or uricotelic. Another developmental constraint must be considered too. For example, birds are uricotelic (uric acid) probably because during the development of the embryo the wastes cannot be excreted outside the egg and therefore, excreting uric acid allows to greatly decrease the toxicity of the embryo's environment. In short, we must consider


Water availability
energy loss
developmental constraints




Note: This domain is not at all my field of study and I have no reference, typically for what concerns the toxicity, water amount and energy amount. One should not take my words for granted!