Water and environmental management systems in Kosovo and North Macedonia face persistent infrastructure challenges that hinder progress toward sustainability, public health protection, and EU alignment. This study investigates the critical gaps in wastewater treatment, pollution control, and environmental monitoring by employing a mixed-methods approach, including spatial analysis, infrastructure performance assessment, and sustainability indicators. The findings reveal widespread disparities in service coverage, especially in rural areas, aging and underperforming facilities, weak enforcement of environmental regulations, and fragmented institutional coordination. The paper identifies key pollution hotspots, highlights the limitations of existing monitoring networks, and examines the socio-environmental consequences of untreated wastewater and industrial discharge. In response, it proposes a multi-pronged framework that integrates engineering and nature-based solutions, such as decentralized treatment systems, constructed wetlands, automated monitoring networks, and hydrological modeling tools. The study emphasizes the need for river basin-based planning, financing strategies tailored to local contexts, and institutional capacity building. By offering practical, scalable, and context-specific recommendations, this case study contributes to addressing the infrastructure deficits that limit resilience and sustainable development in the Western Balkans.