Climate change has varying effects across the world. In North America, arid and semi-arid regions are subject to creeping warming together with more extreme climate variations, decreasing precipitation, and decreasing river flows that risk livelihoods of human populations living in these areas, and push their capacity to adapt beyond known boundaries. Environmental impacts act together with effects of socio-economic globalization and challenges imposed by institutional and policy events. These multiple forms of globally-driven changes interact with local communities and produce winners and losers depending on their levels of vulnerability and adaptive capacity, as well as on the specific stressors and shocks affecting the livelihood resources on which they depend. Rural communities often are hot spots of global change impacts because many livelihoods depend on the community’s natural resource base, and in several cases, they are also subject to market fluctuations and crashes due to their participation in international chains of food and producer goods. They will face a larger burden of the global change impacts due to this multi-tiered exposure. The socio-economic and institutional changes affecting rural communities have also produced de-agrarianization of livelihoods. Diversified livelihoods based on extractive industries and manufacturing or urban-based jobs coexist with traditional small-scale ranching and farming. In terms of water and land access and use, the modifications in user sectors and necessities, combined with increased demand by social and ecological components of the watershed systems, creates more complexity of environmental governance regimes and institutions. The purpose of this research is to identify and understand how rural communities of arid Northwest Mexico—with reference to the San Miguel Watershed (SMW) in central Sonora State—experience and respond to globally driven environmental, socio-economic, and institutional changes. The SMW is in a rapidly changing arid transboundary region, and exhibits a variety of institutional arrangements for land and water management, which makes it a case suitable for the study of adaptation in the face of global change. The study employs a combination of quantitative and qualitative methodologies in three municipalities representing the upper, middle, and lower SWM. Rural households and producers, governmental agents, and local leaders were the participants of direct data collection, while documentary analysis and a broader literature review on rural adaptation in Mexico and the arid Southwest United States complemented primary data. The main contributions of the research are: 1) identifying multiple types of rural livelihoods and their importance in understanding adaptation to global change; 2) emphasizing institutional events and factors acting as both stressors and regulators in these adaptation processes, 3) describing how interactions between institutions can produce diverse governance outcomes in terms of access and management of resources for livelihoods' adaptation; and 4) providing empirical evidence for improving adaptation policies in rural arid Northwest Mexico, and other rural arid communities of the world. The study also includes a series of findings and lessons regarding advances in understanding human adaptation in rural communities, contributions to the theory and methods of adaptation science, and policy guidelines based on the findings.