Water and electricity have a unique relationship in the modern world as one requires the other in a complex system of networks to supply the utility to the customers. This energy−water interaction is especially peculiar in the Gulf Cooperation Council, where there are limited water resources, but extremely high use rates. Qatar provides a unique case in terms of extreme water scarcity and excessive water use. To understand the intricate network, this paper establishes an updated and comprehensive qualitative model of the water system in the country with the help of a water balance and system dynamics (causal loop diagram) methodology. Regression estimates are then used to estimate future water and energy consumption in addition to carbon dioxide emissions until the year 2050. Finally, system dynamics (stock and flow diagram) is used to determine the supply impacts of efficiency policies including limiting of groundwater abstraction to only 50 million m3, reduction of water consumption in the household, commercial and industrial sector by 10%, and gradual increase in the share of reverse osmosis (RO)-produced desalinated water to 50% in order to assess the supply volume, electricity consumption and CO2 emissions. The efficient use of water in different sectors of the economy results in a combined saving of 1222 GWh (8.1%) or 594,000 tons CO2. Furthermore, by moving to membrane-based desalination technology energy consumption and carbon dioxide emissions can be reduced by 3672 GWh (24.3%) and 1.8 million tons CO2, respectively. Further results suggest that while replacing groundwater with desalinated water can increase the energy consumption significantly, reuse of treated wastewater has almost the same footprint as groundwater, but can increase the resilience of the system considerably as groundwater abstraction levels are lowered to their renewal rates.