Article InformationThe sustainable development of water resources is a multi-dimensional way of thinking about the connections or interdependencies among natural, social, and economic systems in the use of water. The purpose of environmental impact assessment is to guarantee a sustainable development that is in harmony with human welfare and the conservation of ecosystems and hence it should be clearly understood by all concerned. The main purpose of this paper is to review the current level of understanding of environmental impact assessment of water resources development; to assess the major challenges to sustainable environmental systems from water resources development perspectives, and to identify major environmental issues that need to be considered in sustainable water resources planning and development. During project study and design, major environmental impacts of water resources development should be identified and made available for decision makers and the public. In the arena of Integrated Water Resources Management, the environment should be considered as one of the legitimate users of water, and allotted reasonable amount of water for its sustainability. Hence, environmental flows assessment should be a mandatory condition for granting permission for project construction. Besides, as catastrophic flood events resulting from dam breaches are enormous, performing dam breach flood wave propagation and inundation mapping during the design phase of the project would support timely decision on the fate of the project or identifying mitigating measures to be taken. In the instances of shortage of geographic data, remotely sensed data can be analysed in GIS environment to generate data and map the information. Simulation models, coupled to GIS, would add GIS layers to provide clarity of impacts. To bring about environmental integrity of water resources development, the major challenges like population pressure, climate change, lack of proper planning and integration, policies and institutional arrangements should be properly addressed.