<p>To deal with water scarcity in agriculture, large amounts of public funds worldwide have been invested in more efficient irrigation systems with the overarching aim to save water. However, in many cases, water consumption has rather increased than decreased. One way to avoid these rebound effects is a reduction in water rights of farmers that receive subsidies for more efficient irrigation infrastructure. Close coordination between water and agricultural administration is paramount in this context, but often lacking. This paper analyses the determinants of different forms of coordination, namely hierarchy and cooperation, and non-coordination between the water and agricultural sectors in the context of the “modernization of irrigation” in two Spanish river basin districts. This study shows that depending on the respective problem to be addressed, actors coordinate differently. Furthermore, narratives of actors and biophysical characteristics influence the type of coordination, and ultimately policy outcomes. Empirically, this study reveals significant shortcomings in Spanish and European Union water and agricultural legislations. These legislations do not incentivize public administrations in either sector to enforce reduced agricultural water consumption, and address underlying distributional issues.</p>