Agricultural development in the Murcia autonomous region, Spain, has led to overexploitation of groundwater resources, and climate change will further increase pressures. Policy options to tackle the current unsustainable situation include the development of inter-basin water transfer (IBWT) schemes from wetter regions in the north and the introduction of taxation to further control groundwater abstraction. Under these scenarios, farmers with current access to water could face higher water cost, whereas farmers in areas where water was previously not available could see first time availability of water resources. In this paper, we combine discrete choice-based interviews with farmers in the Torrealvilla catchment, in which they indicate how they would adapt their land use under different scenarios, with an input-output model to assess the aggregate effects of individual land use decisions on the economy and water consumption of the Murcia region. The paper presents steps taken in the development of an input-output table for Murcia, including disaggregation of the agricultural sector, accounting for sector water use and consideration of back- and forward linkages. We conclude that appropriate taxation can lead to better water use efficiency, but that this is delicate as relatively small changes in prices of agricultural products can have significant impacts on land use and water consumption. Although new IBWT schemes would enable water to be used more efficiently, they would considerably increase regional water consumption and the regional economy's dependence on water. As this is not sustainable under future climate change, water saving development pathways need to be explored.