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Kisayani Water Project (KWP) was implemented in Kibwezi, a semi-arid area in Kenya, to improve the livelihood of the communities in the area. The Project underwent an Environmental Impact Assessment (EIA) before implementation. This study, evaluated environmental and social impacts of the project. There was significant change in internal population immigration which increased by 80%, while land price per acre increased from Kshs. 600 to Kshs. 25,000. Beneficiaries had Water borne disease prevalence of 18.6% while control had 81.4 % of the total cases reported. The project led to 30% improvement in food. Diversification of income activities increased by 97% while environmental conservation initiatives increased by 90%. Lives of both women and youth were better after than before the project. Project management by the local community, greatly improved sense of ownership. Environmental awareness among the community members improved by 40% after participation in the EIA. Some underlying factors such as local politics, poor governance in local water project committees as well as weak capacity in leadership were found to threaten the sustainability of water project.