Study region: Fårö island, part of Region Gotland, Sweden. Study focus: Despite its importance for proactive planning and management, understanding of how future climate and socioeconomic trends may interact to influence water supply and demand at sub-regional scale remains limited for the Nordic region. We aim to close this knowledge gap by developing a combined social and hydrological simulation model for Fårö island in the Baltic Sea. We use multivariate Monte Carlo simulations to explore the effects of future climate scenarios (RCP4.5 and RCP8.5) on local groundwater supplies, and subsequent impacts on the housing sector, tourism sector, and municipal water supply system in the period 2020–2050. New hydrological insights for the region: Our results suggest that groundwater storage will remain critically low in the coming 30 years, with a 60–70% probability of the groundwater head falling to lower levels than experienced in the past 60 years. Low water availability and widespread saltwater intrusion will constrain housing and tourism development by up to 11% and 30% respectively. To sustain growth, the tourist sector will become increasingly reliant on water from private wells, and supplementary water deliveries from neighboring regions will be required to meet water demand on the municipal grid. © 2022 The Authors