Agriculture has historically played a central role in the life, economy and culture of the Libyan population. However, in the 21st century the country is facing the reality that its natural fresh water resources become fully utilized and that there is an urgent need to re-evaluate the long-term water management strategy. While calls for food security based on growing most crops locally arouse popular support, this article will show that the modem, rational economic approach to this question is that Libya should face reality and decide upon its priorities for water supply. Priority in utilization of its limited fresh water resources should be given to the human needs of drinking water, tourist activities, and industry, by assuring the quality of life. It is more rational to import most of the high water consuming food and fodder, particularly the products which can be shipped and stored easily from countries with plenty of water from natural and renewable sources. In other words, the strategy should develop towards import of "virtual water" in its most economical form: food. This study shows that Libya ought to adopt this policy and should import a high percentage of the national caloric intake. Plans must be made over a 20-year-period to retrain the agriculture population for alternative employment in a modem economy.