Spain is the most arid country in Europe and water use as well as water depletion and environmental degradation have slowly become a matter of social concern. Balancing the two objectives of “water for rural livelihoods” and “water for nature” constitutes a difficult challenge for the water Administration. The aim of this paper is to analyze the impact of water conservation policies in the Upper Guadiana River basin (Spain), where intensive irrigated agriculture resulted in the overexploitation of the Western La Mancha aquifer and the subsequent degradation of the highly valuable wetlands. Focus is made on farmers’ vulnerability to these policies. The methodology combines qualitative and quantitative aspects by the integration of an economic model and a vulnerability analysis. The economic model simulates farmers’ behaviour facing different policy options, and the results are used as an input for the analysis of vulnerability based on farm income indicators, through the elaboration of a classification tree. The model integration presented in this work proves that, in the case of the Upper Guadiana, different farm types stand diverse policy impacts and that structural, behavioural and institutional aspects play a major role in those impacts, being small and legal farms the most vulnerable ones.