Since you have given no information about the size of the tree or when the problem began or any background information, there's not much to be said.  It could be winter burn from sweeping winds drying needles in the winter but since I don't know when it happened, it is just a guess. 

But whatever is brown will never turn green again. Those needles will be eventually shed and hopefully, new growth is coming on the ends of the twigs and branches.

The gray-white stuff in the photo is called foliose lichens.  It is a combo creation of algae and fungus that live together in perfect harmony and make food for each other and live on atmospheric moisture.  They live on dry wood or rocks and do not harm anything.  it is always more visible in the spring and fall when it is cool and damp.  It does not indicate anything and it does not harm anything.

Just figured out how to use the reply feature.  I think you are right about winter burn.  There are two trees, which I put in as 3 foot trees five years ago.  Were doing really well, about 12 feet tall.  This happened over the winter, more on the side facing the sun.

should I give them extra water now?  It seems to be a dry spring here so far.

Check the soil moisture and if it is damp, more water is not going to help.  The brown portions of the needles will remain brown.  But watch for new growth.  It will be green if everything is good.  The brown needles will fall off eventually and it there is not winter burn another winter, the trees will be green.