The focus of this study was to investigate the impact of climate and land-use changes on water resources and to find suitable drought indices to identify the occurrence, frequency and severity of the past and future drought events. The Ebbw catchment, Wales, UK was selected for this study. Data for the 1961–2012 period were used as input to the DiCaSM model. Following model calibration and validation, the model was run with UKCP09 future climate scenarios for three periods (30 years each) up to 2099 under three emission scenarios. The reconnaissance drought index, the standardized precipitation index, soil moisture deficit and the wetness index were able to reproduce the past drought events. The data of UKCP09, simple change factors to temperature (± °C) and rainfall (%) using Joint Probability plot and daily values of the weather generator were input to the model. The projections indicated that the streamflow and groundwater recharge are likely to increase in winter and to decrease in spring, summer and autumn. Under all emission scenarios, the greatest decrease in groundwater recharge and the streamflow is projected in the 2050s and 2080s under high emission scenario. Moreover, under medium and high emission scenarios, severity and frequency of the drought events are likely to be high. Land use change from grass and/or arable to woodland had significant impact on water resources.