Small Island Developing States are some of the most vulnerable to climate stress despite their modest contribution to carbon emissions. To date little scholarly research has addressed the economic impacts of climate stress associated with abstraction from limited groundwater resources required to meet urban and agricultural requirements. Employing downscaled data on precipitation from the Representative Connection Pathway (RCPs), this work aims to develop, apply, and interpret a groundwater hydroeconomic framework for a single unconfined karst aquifer system. The framework integrates groundwater hydrology characteristics, climate scenarios, economic, land use, agronomy, and groundwater abstraction policies. It is used to assess the impacts of climate change on the performance of groundwater management policies, with special attention to groundwater sustainability, economic livelihoods, urban needs, and food security. The findings indicate that climate change will exacerbate the challenges being faced by SIDS reliant on groundwater resources. Over a period of 2018 to 2100, limiting groundwater abstraction can protect aquifer sustainability, but it would produce negative impacts on food and water consumers’ welfare. However, the negativity associated with protecting the groundwater is smaller than that associated with the increasingly severe climate change RCP scenarios. The negative impact of the climate change scenarios and sustainable management would be experienced in the long run rather than the short and medium term. The results provide a framework to assess the water management and policy options for countries that are vulnerable to climate change when endowed with limited water resources such as Small Islands Developing States and Tropical Regions.