Development of water infrastructure is conventionally prioritised as a pre-emptive intervention policy to address water challenges. In the Vietnamese Mekong Delta, turning a river into a reservoir is touted as a ‘highly-modernist’ water management approach to secure the year-round supply of freshwater for agricultural production. This paper investigates how contested water-livelihood relations emerged from the building of the Ba Lai sluice scheme in Ben Tre Province, and how these processes demonstrate farmers’ agency in everyday politics in seeking solutions for livelihood sustainability. Drawing on a qualitative case study in Binh Dai District, we argue that, while the scheme successfully fulfils the state’s political intention in securing water supply for freshwater-based crop production in coastal zones, it generates contestation between the local government’s attempts to enforce freshwater policies and farmers’ agency in maintaining productive livelihoods. The findings suggest that power asymmetries are embedded within these water-livelihood relations. We find that seeking just solutions that have co-benefits for water management and livelihood sustainability should go beyond business-as-usual water politics by adequately recognising the agency of farmers in sustainable development. The case study offers lessons for navigating the sustainable future of water development projects in coastal deltas and beyond.