Abstract: This article aims to show that virtual water has historically been an adaptation strategy that enabled some arid regions to develop a prosperous economy without putting pressure on their scarce water resources. Virtual water is referred to as the total amount of water that is consumed to produce goods and services. As an example, in arid central Iran, the deficiency in agricultural revenues was offset by more investment in local industries that enjoyed a perennial capacity to employ more workers. The revenues of local industries weaned the population from irrigated agriculture, since most of their raw materials and also food stuff were imported from other regions, bringing a remarkable amount of virtual water. This virtual water not only sustained the region’s inhabitants, but also set the stage for a powerful polity in the face of a rapid population growth between the 13th and 15th centuries AD. The resultant surplus products entailed a vast and safe network of roads, provided by both entrepreneurs and government. Therefore, it became possible to import more feedstock such as cocoons from water-abundant regions and then export silk textiles with considerable value-added. This article concludes that a similar model of virtual water can remedy the ongoing water crisis in central Iran, where groundwater reserves are overexploited, and many rural and urban centers are teetering on the edge of socio-ecological collapse. History holds an urgent lesson on sustainability for our today’s policy that stubbornly peruses agriculture and other high-water-demand sectors in an arid region whose development has always been dependent on virtual water.