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For decades, large reservoirs have been built for hydropower plants in Brazil’s Sao Francisco River Basin. Rural development has been a simultaneous goal with a primary focus on irrigation. Irrigated agriculture, however, has suffered from poor soils, insufficient water management strategies, and a disregard for integrating grazing-based smallholdings outside of the irrigation schemes. Recurrent droughts are distressing all sectors. This synthesis assessed sustainable land management options by investigating the aquatic and terrestrial land use systems alongside their underlying ecosystem functions and services. Decisions about the allocation of scarce water proved to be both the major issue of land use discourses and driver of practices. The primarily hydroelectricity-focused water management practice cannot be maintained at the same level in the long run, as it has become ever more adverse towards competing water usages. The increasing use of the water and adjacent land also constitutes a major potential threat to water quality. Managed water level fluctuations should generally mimic natural patterns. Wind and solar power generation are suitable complements to agricultural land use. Cycling scarce nutrients between aquatic and terrestrial sectors is ambitious but promising, ultimately improving the generally poor soils in the area. Smart management of biodiversity can foster intensively-irrigated cropping, although the non-irrigated Caatinga ecosystem needs better management of its conflicting uses. Aims and responsibilities of multi-level planning and management require clarification and coordination between sectors, while practices of public participation should be revised in order to better support a comprehensive and transparent transition towards sustainability.