The global demand for agricultural commodities has driven extensive land conversion to agriculture in Brazil, especially in the MATOPIBA region. This area encompasses the Rio Grande Basin, a major tributary of the São Francisco Basin that is known for expanding intensive irrigated agriculture and hydropower generation. However, recent data reveal declining precipitation and aquifer recharge, potentially exacerbating ongoing water and land conflicts. This study investigates the long-term sustainability of agricultural expansion amid the worsening water scarcity using a system dynamics model. Findings suggest that rising costs and decreasing profits due to irrigation water shortages may hinder the expansion of irrigated land. By 2040, the irrigation demand may remain partly unmet, while downstream flow and baseflow could decrease. Additionally, agricultural expansion will significantly raise energy demand, posing a developmental challenge. We suggest that ensuring the sustainability of the Rio Grande Basin depends on improved water management and exploring alternative energy sources to address existing constraints.