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Climate-stressed groundwater resources present a growing challenge for protecting food security and economic sustainability, notably in Small Island Developing States (SIDS). These states are some of the most vulnerable to climate stress because of their large coastlines, vulnerability to rising sea levels, weak access to reliable surface water, and limited food production capacity for handling increased groundwater scarcity. Impacts of climate stressed groundwater resources brought on by irrigation and growing urban demand in SIDS continue to receive widespread attention by both scientists and policymakers. Policies that limit pumping to protect aquifer sustainability reduce short-term economic welfare by unknown amounts that would otherwise be secured by both urban and irrigation water users. Yet, little scholarly research has addressed economic impacts of climate-water stress for the special needs of SIDS for which urban and irrigation pumping compete hydrologically and economically over long time periods. The original contribution of this work is to address that gap by employing downscaled data on precipitation from Representative Concentration Pathways (RCP) climate scenarios. Its novel contribution is to conceptualize, develop, apply, and interpret an integrated hydro-economic framework to understand interconnected physical and economic linkages from managing an unconfined regional aquifer system under each of three climate and two policy scenarios. The application is to Barbados, a SIDS, for which current and future irrigation and urban demands compete for water. The framework integrates groundwater hydrology, climate scenarios, economics, land use, and groundwater management, with the intent to mitigate impacts of climate stress on current economic values of water as well as protecting future aquifer sustainability. Results provide a framework to guide water management for SIDS vulnerable to climate stress for which water of the right quantity, quality, timing, location, and price are essential elements of economic development.