The sustainable development in Iraq is being hindered by several obstacles. Water, being related to the food security, is a main concern that could duplicate the already present socio-economic dilemmas. Unless practical measures are immediately initiated, the consequences are expected to demolish the development achievements, though so modest, and become a real threat to the lives of the Iraqis within the near future. This paper aims to present a holistic view at the current development challenges and to concentrate on the socio-economic challenges to water sustainability in Iraq. Also, stresses on the need for a comprehensive national plan for the conservation of water and other natural resources and how to reverse the environmental challenges into practical opportunities for sustainable development.