The coupling of human and natural systems poses at least three major types of climate-related risks to human populations and economic activity in southwestern North America: 1) exposure of human communities to weather extremes, from cyclones to drought, 2) dependence of growing populations on limited water supplies in this arid region, and 3) climate and water-related agricultural production risk. A project recently funded by the Inter Americas Institute for Global Change Research examines interactions between these risks and additional stresses generated by climate change and by tensions between rural and urban resource needs. Our initial investigations into the regional context show that key vulnerabilities in agricultural areas result from a combination of (a) intensification of irrigated agriculture for export, (b) high energy use for ground water pumping, (c) overdraft of groundwater aquifers, due to water use in excess of government allocations and poor enforcement of allocation limits, (d) pressure on agricultural wells from rapidly expanding urban areas, (e) planting of low water use efficiency crops in the U.S. Urban vulnerabilities include (a) exposure to drought deficits in surface water reservoirs, (b) high energy consumption for water conveyance, (c) politicization of urban water management and frequent turn-over of agency staff, and (d) lack of adequate infrastructure in Mexico for water treatment, supply, and distribution, and wastewater collection, treatment, and reuse. Wastewater treatment and reuse, along with ocean and brackish groundwater desalination, is increasingly seen by water managers as a strategy for coping with changing water supply reliability in the face of climate change. The project also attempts to improve cross-border climate information flows through a border climate newsletter and engagement with regional stakeholders. We present preliminary results from our investigations and interactions with stakeholders.