Like many of the world’s large-scale terminal lakes, the Urmia saltwater lake in northwestern Iran is undergoing a process of desiccation. The anticipated economic, social, environmental and health consequences of this are daunting. We set out to examine the policies that have been designed in response to the lake crisis in the past twenty years. We focus on the set of measures proposed by the Urmia Lake Restoration Program (ULRP) and explain why their impact on water savings are overstated while the potentially most effective measures are abandoned. We then discuss the various social, institutional and political factors that have led to this state of affairs. Identifying and understanding the array of political and other factors that combine not only to impede appropriate remedial measures but also to fuel the overexploitation of water are essential to our comprehension of how to avert unsustainable water futures.