Study region This research focuses on the Guadalquivir River Basin in southern Spain, a region characterized by high agricultural water demand and increasing vulnerability to drought. The basin serves as a critical case study for semi-arid Mediterranean environments. Study focus The study evaluates the impact of three distinct water allocation rules: proportional allocation (uniform allotment reductions), proportional economic losses (equalized relative reduction in gross margins), and optimal allocation (prioritization of water-productive crops). Using a hydro-economic model, the research simulates various scarcity scenarios (10% to 70% reductions) and examines the mitigating role of groundwater reserves during periods of drought. New hydrological insights for the region The findings reveal that while proportional allocation is often perceived as equitable, it results in the most severe and uneven economic losses (16.1% at a 50% water deficit). In contrast, an optimal allocation rule minimizes aggregate losses to 12.0%. Access to groundwater significantly cushions the impact, reducing losses to approximately 5.3%–7.0%. The study highlights that traditional water-sharing rules are economically inefficient and socially inequitable, advocating for a transition toward allocation models based on economic efficiency and territorial equity to ensure water sustainability in an uncertain climate. Overall, our results provide a policy-relevant quantification of the efficiency–equity trade-offs of drought rationing and show that strategic conjunctive use can substantially increase irrigation resilience in semi-arid, agriculture-dominated basins.