This paper introduces a realistic 3D model supported virtual environment for environmental education, that highlights the importance of water resource sharing by focusing on the tragedy of the commons dilemma. The proposed virtual environment entails simulations that are controlled by a multi-agent simulation model of a real ecosystem consisting of a lake that is being drained by a community of farmers with different types of behaviours. This resembles real-life scenarios, where farmers operate under extreme economic pressure. The virtual environment provides realistic visualization of the elements of the multi-agent model in a comprehensible manner, while keeping the details and the complexity of the ecosystem hidden from the students. Extensive experiments were conducted using students divided in a control group, exposed to conventional teaching means, and an experimental group that used the proposed virtual environment. Both groups were administered questionnaires at pre-test and post-test intervals, and conclusions were drawn after qualitative and quantitative analysis of the results. It was revealed that the proposed virtual environment provided significant cognitive advancements for the students, especially for complex inter-related notions, thus constituting a valuable tool for environment education. (Contains 14 figures and 1 table.)