A system of water governance aims to improve the ecological conditions of resources and their sustainable use. In an era with ecological changes (e.g. extreme events, climate change, etc.), the adaptability of the governance system is so important; therefore, the system capacity of social learning is on the spotlight as the key characteristic. In order to assess the adaptation capacity, the governance system needs to be evaluated with a reference to social learning. Social learning is the learning that occurs by formal and informal institutions based on direct self-experience, observation, and learning from past experiences. Persisting Iran's water resources problems, despite adoption of various policies and laws by Iranian formal water institution, shows that the current institutional structures faces serious weaknesses. This research aimed to apply the social learning loops to evaluate the formal institutional structure of the Iranian water governance in association to the mechanisms governing emergence of water demand in the agricultural sector. Therefore, various documentations including Iran's water laws, national policies and projects related to water and agricultural sectors were evaluated adopting qualitative content analysis and theme analysis methods. The results showed that the formal institution capacity is trapped in a single-loop learning and from this perspective, the formal institution is very vulnerable and suffers from too low adaptation capacity to deal with changes. It was also shown that the governance structure is highly centralized with a dominant top-down hierarchy. In order to enhance the flexibility and adaptability of the water institution, it is necessary to modify the laws associated to the water and agricultural sectors emphasizing on destructive mechanisms. Furthermore, the process of decision-making needs to become participatory engaging all the stakeholders, especially informal institutions. The formal institutions associated to water and agricultural sectors need to get integrated and converge in their policies. Finally, macro-developmental policies require to be redefined with respect to the country’s limiting water resources.