Drylands are exposed to climate stressors, such as water scarcity, as well as societal stressors, including conflicts, which can make water governance unsuitable for the system’s context. The emergence of adaptive water governance often takes places in these challenging contexts, but the process of achieving this style of governance requires a better consideration of system complexities. Using the Rio del Carmen watershed in Mexico as a case study, with primary data obtained through a questionnaire survey carried out with 217 farmers, this paper aims to identify the main complexities and needs to enable the emergence of adaptive water governance. We found that different groups of farmers converge in identifying system stressors and the main needs regarding water governance; yet, the ways these stressors are perceived differ between groups. The results indicate that contrasting perceptions are shaped by the different cultural roots and environmental conditions in the upper and lower parts of the watershed. This variation increases the difficulty in achieving collaboration and compromise when conflicts ensue. Reducing inequalities in the awareness of system stressors has the potential to enable adaptive water governance. This could be achieved through a peacebuilding technique with an appropriate cultural approach for the watershed’s context in the early stages of a stakeholder engagement process.