Drought is a natural disaster that affects millions of people across the globe. Lack of rainfall reduces crop yields and livestock productivity and in turn, food availability and income. In developing countries, these effects are even more detrimental. As droughts become more frequent, adaptation is a fundamental concern for countries and their policy makers. Hydrologic and system dynamics models were developed for a region in East Africa, focused on the Horn of Africa (ie. a region bordering Kenya, Somalia, and Ethiopia), an area well-known for frequent droughts due to unpredictable rainfall and high temperatures. The models simulate the interdependencies between water availability, land degradation, food availability, socio-economic welfare and the impact new adaptation policies can have on the region over a 10 year simulation. It was found that a combination of increased hydraulic infrastructure and innovative agricultural practice policy can reduce domestic water deficits by 54-100% while increasing the income per capita up to 285% over the 10 years. By innovatively combining hydrologic and system dynamics modeling, realistic simulation of the effects water scarcity has on natural systems can be observed. Implementation of policies within the model aids the selection process by evaluating multiple options, quantifying the effectiveness the policies have on individual stakeholder livelihood, and analyzing the overall outcome to ensure equitable costs and benefits.