<p>This article seeks to demonstrate the fundamental role of water resources in shaping a resilient socio-economic landscape in Meymand, a UNESCO World Heritage village in Iran. Meymand has traditionally managed its scarce water as a common-pool resource through a governance regime based on two main pillars: time-based water allocation and semi-nomadism. Its water allocation system helps align agricultural demand with fluctuating water availability, while semi-nomadism reduces pressure on groundwater reserves by promoting economic diversification. However, over recent decades, this governance regime has been undermined by top-down state interventions that prioritize water supply over demand management. Employing a qualitative hermeneutic approach based on documentary sources and ethnographic interviews, this study reveals how state-led over-extraction via tube wells and water-intensive industrial expansion have devastated both qanat-based agriculture and pasture-dependent pastoralism, dismantling Meymand’s traditional water governance regime. The findings show that Meymand’s adaptive capacity—once sustained by its local governance system—has been critically eroded by centralized policies and state favoritism, turning a once-resilient system into one vulnerable to the tragedy of the commons. The article offers insights into the broader implications of governance transitions for traditional water systems and rural sustainability in arid regions.</p>