This study prioritized initiatives within the China–Pakistan Economic Corridor (CPEC), foreign funding, and the associated environmental and national issues. Additionally, it analyzed these factors’ effects on improving infrastructure, commerce, and economic cooperation between China and Pakistan. Besides that, it also studies the current climatic, economic, and political challenges, mainly focused on water and agriculture issues. Climate, economic, and political issues affect the environment. These concerns deserve global attention. Pakistan mainly relies on agriculture, and its water scarcity predisposes it to economic losses, urbanization, and many socioeconomic problems. Climate change and the current flood have devastated the agriculture sector. Water scarcity affects agriculture too and significantly impacts the economy and food resources. The nation has not previously experienced such a profoundly distressing epoch. Pakistan has faced several environmental, economic, and political challenges; specifically, the fields of agriculture and water present notable apprehensions. Unfavorable climatic conditions impede the attainment of sustainable agriculture in Pakistan. Considering the strong reliance of agriculture on water resources, it is crucial to acknowledge that industrialization has resulted in substantial water contamination due to the presence of microplastics and heavy metals. Moreover, the South Asian region experiences a significant scarcity of water resources. Besides that, CPEC is the solution for the financial issues, but it is a big challenge for environmental degradation in the current stage, especially since foreign funding is a key challenge for increasing corruption and bringing more burden on the economy. Unfortunately, foreign funding is not good for Pakistan. To ensure safety, security, and sustainability, CPEC projects should follow environmental regulations. This study provides a new list of CPEC initiative priority tasks that more openly disrupt the initiative, serve the whole project, and give appropriate recommendations for future research and policy-making.