Water supply and demand management (WSDM) is essential for developing sustainable cities and societies. WSDM is only effective when tackled from the perspective of a holistic system understanding that considers social, environmental, hydrological, and economic (SEHEc) sub-systems. System dynamics modeling (SDM) is recommended by water resource researchers as it models the biophysical and socio-economic systems simultaneously. This study presents a comprehensive literature review of SDM applications in sustainable WSDM. The reviewed articles were methodologically analyzed considering SEHEc sub-systems and the type of modeling approach used. This study revealed that problem conceptualization using the causal loop diagram (CLD) was performed in only 58% of the studies. Moreover, 70% of the reviewed articles used the stock flow diagram (SFD) to perform a quantitative system analysis. Furthermore, stakeholder engagement plays a significant role in understanding the core issues and divergent views and needs of users, but it was incorporated by only 36% of the studies. Although climate change significantly affects water management strategies, only 51% of the reviewed articles considered it. Although the scenario analysis is supported by simulation models, they further require the optimization models to yield optimal key parameter values. One noticeable finding is that only 12% of the articles used quantitative models to complement SDM for the decision-making process. The models included agent-based modeling (ABM), Bayesian networking (BN), analytical hierarchy approach (AHP), and simulation optimization multi-objective optimization (MOO). The solution approaches included the genetic algorithm (GA), particle swarm optimization (PSO), and the non-dominated sorting genetic algorithm (NSGA-II). The key findings for the sustainable development of water resources included the per capita water reduction, water conservation through public awareness campaigns, the use of treated wastewater, the adoption of efficient irrigation practices including drip irrigation, the cultivation of low-water-consuming crops in water-stressed regions, and regulations to control the overexploitation of groundwater. In conclusion, it is established that SDM is an effective tool for devising strategies that enable sustainable water supply and demand management.

In Mediterranean and arid environments facing increasing hydro-climatic pressure, irrigated agriculture is central to food security while placing strong pressure on limited water resources. In response, on-farm irrigation optimization, particularly regulated deficit irrigation and efficiency-oriented technologies, has demonstrated benefits in yield stability, water productivity, and farmer income. However, these improvements often produce unintended basin-scale effects, as efficiency gains do not necessarily translate into collective water savings and can undermine long-term water management objectives. Drawing on evidence from four ACQUAOUNT pilot sites (Italy, Tunisia, Jordan, and Lebanon), this contribution examines the trade-offs between farm-level optimization and basin-scale water management objectives. Using a narrative-based Decision Support Tool that integrates climate projections, hydrological modeling, agricultural water demand, and socio-economic evaluation, we assess how deficit irrigation interacts with allocation rules, sectoral competition, and ecosystem requirements under current and future climate conditions. Our analysis shows that in water-scarce basins, economically accessible water resources and productivity-driven incentives often lead farmers to reinvest efficiency gains into expanded or intensified water use, offsetting potential basin-level savings. These dynamics highlight a structural disconnect between agricultural decision-making and sustainable water governance. By disentangling these processes across contrasting contexts, we derive actionable recommendations to better align irrigation practices with basin management interventions. The results support Integrated Water Resources Management (IWRM) approaches that balance agricultural resilience, ecosystem preservation, and climate adaptation, explicitly accounting for cross-scale feedbacks in irrigated systems.