The livelihoods of people in the Andes are expected to be affected by climate change due to their dependence on glacier water. The observed decrease in glacier volume over the last few decades is likely to accelerate during the current century, which will affect water availability in the region. This paper presents an approach for participatory development of community-based adaptation measures to cope with the projected impacts of climate change. It combines in an innovative manner participatory design with physical measurements, modeling and a vulnerability analysis. Vulnerability to drought is made operational for households in a catchment of the Ocoña River basin in Peru. On the basis of a household survey (n = 94) we explore how a vulnerability index (risk divided by response efficacy) can be used to assess the distribution of vulnerability over households, and how socio-economic factors determine this vulnerability. Water entitlement, area of irrigated land, income and education are all significantly correlated with vulnerability to drought. The research showed that the main source of spring water is local rainwater, and that water use efficiency is low. The selected adaptation measures aimed to increase water availability close to farmland, and increase water use efficiency of farmers and households.