Exploring the dynamic mechanisms of coupled sociohydrologic systems is necessary to solve future water sustainability issues. This paper employs system dynamics modeling to determine hydrologic and economic implications of an irrigation efficiency (IE) policy (increased conveyance efficiency and field efficiency) in a coupled sociohydrologic system with three climate scenarios. Simulations are conducted within the lower Rio Grande region (LRG) of New Mexico for the years 1969 to 2099, including water, land, capital, and population modules. Quadrant analysis is utilized to compare the IE policy outcomes with the base case and to categorize results of simulations according to hydrologic and economic sustainability. The four categories are beneficial, unacceptable, unsustainable agricultural development, and unsustainable hydrology. Simulation results for the IE policy analyzed here fall into the categories of unsustainable agricultural development or unacceptable, suggesting there are long-term negative effects to regional economies in all scenarios with mixed results for hydrologic variables. IE policy can yield water for redistribution as increased unit water supply in the field produces more deep percolation; however, IE policy sacrifices regional connectivity. Specifically, simulation results show that the policy increases abundance by 4.7–74.5% and return flow by −3.0–9.9%. These positive results, however, come at the cost of decreased hydrologic connectivity (−31.5 to −25.1%) and negative economic impacts (−32.7 to −5.7%). Long-term net depletions in groundwater are also observed from loss of hydrologic connectivity and increased agricultural water demand from projections of increased consumptive use of crops. Adaptive water management that limits water use in drought years and replenishes groundwater in abundant years as well as economic incentives to offset the costs of infrastructure improvements will be necessary for the IE policy to result in sustainable agriculture and water resources.

Seasonal runoff from montane uplands is crucial for plant growth in agricultural communities of northern New Mexico. These communities typically employ traditional irrigation systems, called acequias, which rely mainly upon spring snowmelt runoff for irrigation. The trend of the past few decades is an increase in temperature, reduced snow pack, and earlier runoff from snowmelt across much of the western United States. In order to predict the potential impacts of changes in future climate a system dynamics model was constructed to simulate the surface water supplies in a montane upland watershed of a small irrigated community in northern New Mexico through the rest of the 21^st century. End‐term simulations of representative concentration pathways (RCP) 4.5 and 8.5 suggest that runoff during the months of April to August could be reduced by 22% and 56%, respectively. End‐term simulations also displayed a shift in the beginning and peak of snowmelt runoff by up to one month earlier than current conditions. Results suggest that rising temperatures will drive reduced runoff in irrigation season and earlier snowmelt runoff in the dry season towards the end of the 21^st century. Modeled results suggest that climate change leads to runoff scheme shift and increased frequency of drought; due to the uncontemporaneous of irrigation season and runoff scheme, water shortage will increase. Potential impacts of climate change scenarios and mitigation strategies should be further investigated to ensure the resilience of traditional agricultural communities in New Mexico and similar regions.