Drought and water scarcity are keywords for river basin management in water-stressed regions. “Drought” is a natural hazard, caused by large-scale climatic variability, and cannot be prevented by local water management. “Water scarcity” refers to the long-term unsustainable use of water resources, which water managers can influence. Making the distinction between drought and water scarcity is not trivial, because they often occur simultaneously. In this paper, we propose an observation-modeling framework to separate natural (drought) and human (water scarcity) effects on the hydrological system. The basis of the framework is simulation of the situation that would have occurred without human influence, the “naturalized” situation, using a hydrological model. The resulting time series of naturalized state variables and fluxes are then compared to observed time series. As second, more important and novel step, anomalies (i.e., deviations from a threshold) are determined from both time series and compared. We demonstrate the use of the proposed observation-modeling framework in the Upper-Guadiana catchment in Spain. Application of the framework to the period 1980–2000 shows that the impact of groundwater abstraction on the hydrological system was, on average, four times as high as the impact of drought. Water scarcity resulted in disappearance of the winter high-flow period, even in relatively wet years, and a nonlinear response of groundwater. The proposed observation-modeling framework helps water managers in water-stressed regions to quantify the relative impact of drought and water scarcity on a transient basis and, consequently, to make decisions regarding adaptation to drought and combating water scarcity.