The worldwide paradigm shift in river basin management has not affected policymakers in south Asia. Hydro-diplomacy in the Ganges-Brahmaputra- Meghna basin is still based on reductionist engineering, and looks at marginal economic benefits, without showing any concern for the long-run implications for livelihoods and ecosystem. The governments in the river basin are already facing the challenge of extreme poverty, despite the countries experiencing high levels of precipitation. This paper discusses the lacunae of the reductionist engineering paradigm, and stresses the need for a holistic framework in ecological engineering and for hydro-diplomacy in the basin. This framework is based on a new transdisciplinary knowledge base created by the emerging science of eco-hydrology, economics, and new institutional theories.