Systems thinking is crucial in developing strategies for managing and allocating resources in complex scenarios. In the Global South, Pakistan faces challenges such as water scarcity and energy crises, which require integrated approaches. This study combines long-range energy alternatives planning (LEAP) with a water evaluation and planning system (WEAP) to explore potential strategies for managing interconnected water and energy resources in Pakistan. The aim of this work is to identify policy flaws and assess the consequences of water–energy decisions in Pakistan. The findings suggest that maintaining the current status quo will hinder Pakistan’s goal of reducing its water consumption by 30% by 2027 and its energy usage by 50% by 2030. Innovative modeling scenarios suggest that energy and water consumption reductions in the agricultural, domestic, industrial, and transport sectors could save up to 15% energy usage by 2050. However, water-saving strategies can inadvertently lead to increased energy consumption, particularly in the agricultural and industrial sectors, with projections reaching an additional 2.8 million tonnes of oil equivalent (MTOE) by 2050. Realizing Pakistan’s policy goals and meeting its targets present considerable challenges for the government, especially against the backdrop of severe economic conditions. Current policies necessitate significant investments of 145 billion PKR (∼500 million EUR or USD) for water conservation and an additional 10 billion PKR for energy-conservation measures by 2030. Despite international financial aid, the success of these initiatives is at risk due to political instability, administrative weaknesses, and institutional shortcomings.