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Bio-physical and socio-economic conditions of pre and post dam construction were assessed in one of the arid regions of Iran commanded by Minab dam. The methodology used in this study has been drawn from the international organizations especially the World Commission on Dams (WCD) and the United Nations (UN) for selection of the indicators for sustainable development relating to water resources projects. Results of the study revealed that there are significant positive impacts of dam construction but they were not same as the targeted objectives envisaged in the feasibility report of the project. It means that after construction of the dam and irrigation system, development did not match with the targeted goals of the project. This study argues the world-wide controversy against construction of dam in arid zone which is ill-founded and based on a few short terms, mitigable negative impacts, ignoring many positive long term inputs alleviating chronic poverty in arid regions.