Egypt has recently inaugurated a mega development project aiming to alleviate the overpopulation along the Nile River and to meet the looming food gap. Toshka is a promising area where groundwater-dependent activities are being expanded adjacent to Lake Nasser. Thus, it is of utmost importance to provide a sustainable development approach and to assess the resulting environmental implications. Accordingly, a coupled groundwater flow and transport model was invoked. The generated model was successfully calibrated for the observed water levels and salinity. The proposed exploitation regime of 102 wells each pumping 1000 m3/day was simulated for a 100-year test period. The maximum resulting drawdown was about 25 m, compatible with the advocated sustainable restriction limit. Climate change (CC) impacts of reducing the lake’s storage and increasing the crops’ water requirements were investigated. The lake’s water level fluctuations were a key factor in the aquifer hydraulics and flow direction. The drawdown breakthrough considering the CC catastrophic scenario (RCP8.5) has increased by about 20%. The developed solute transport model was utilized to simulate the salinity spatial distribution and the lateral movement of leaking pollutants from the underway activities. Cultivation activities were found feasible up to 80 km away from the lake border where salinity does not exceed 2000 ppm. Yet, a protection strip of not less than 4.8, 6.0, and 7.2 km according to the lake operating condition is inevitable to ensure that pollutants do not intrude into the lake. These findings will assist the decision-makers in scheming environmental impact assessment criteria for sustainable development.