Water scarcity is a serious problem in Koppal, a semi-arid district with barren rocky hills in northern Karnataka, India. The hills were denuded of forests and trees in the past. Resource depletion continues to occur because of rock blasting and stone cutting. This has led to low groundwater recharge, a problem further aggravated by the digging of bore wells to a depth at which only saline water is available. High-input agriculture combined with saline water has caused the soil to become unproductive. Farmers thus find it more profitable to leave the land uncultivated. As agriculture or other resources in the region do not provide a secure supply of food, people in the area face a severe livelihood crisis. Moreover, the local population and the government do not link the exploitation of rocks and hills to ground water depletion. There is an urgent need for solutions. People respond to their livelihood crisis at the household level and do not come together as a community to address issues. External facilitators are needed to generate a discussion of problems and alternative solutions. Short-term solutions only increase the predicament of the people. Long-term perspectives and investments are required to ensure sustainable management of natural resources as well as livelihoods in this semi-arid area.