Rural communities face challenges due to globalisation, demographic transitions and migration. Despite national progress, many farmers remain in rural areas. This study examines the impact of climate fluctuations on rural communities in the Sulaimani Governorate (SG) in northeastern Iraq using the environmental, social and economic pillars of sustainable development—an aspect not previously studied in this region. Each pillar includes a set of questions to assess how prepared these communities are to sustainably improve their quality of life. Using the ‘WILL CAUSE PEACE’ matrix, the study analysed water sustainability’s role in ensuring peace. Employing a participatory research design, the study utilised purposive sampling to engage 60 farmers, 25 decision-makers, representatives from non-governmental organisations (NGOs) and experts in water resource management. Data was collected through focus group discussions (FGDs) and interviews. The results showed that this matrix effectively identifies the complex interactions among environmental, economic and social factors, which play a crucial role in shaping the sustainable development of diverse regions within SG. Economically, 65% of farmers are unwilling to pay for water due to mistrust in private services, contributing to daily water wastage of 30%–40%. Only 25% of the area has modern irrigation systems, and underinvestment hampers agricultural productivity, with land mismanagement causing up to 30% losses in areas like Chamchamal. Socially, 70% of farmers in Raniya report water conflicts, while 50% of villages lack essential healthcare and education, prompting 60% of farmers to migrate to urban areas. When adopted, modern irrigation increases crop yields by 20%–30%, yet such programmes receive less than 5% of the agricultural budget. Environmental pressures in Iraq include a 308% population growth over 40 years, significantly increasing water demand. Daily water usage exceeds global standards by 100 litres per person. Climate change further exacerbates these challenges, with drought threatening 40 communities in Garmian and putting 25% of its rural population at risk of displacement. Adaptation solutions, such as drip irrigation, can save up to 85% of water and reduce wastage by 20%–30%. However, disparities persist; areas like Penjwin experience minimal impact, with only a 5%–10% yield loss, due to better environmental conditions and resource management.