This research examines the adaptive capacity of farming households in San Blás of Mbocayaty del Yhaguy, Cordillera, Paraguay. This region of Paraguay has endured endemic political corruption and increasingly persistent climate related water scarcity and soil fertility depletion, producing what some scholars have described as a social-ecological poverty trap. Poverty traps tend to have resilient and reinforcing characteristics that sustain populations on minimal resources, while contributing to gradual environmental degradation. Therefore, the social processes creating stress for farmers such as entrenched authoritarian rule and shifting ecological systems, jointly reproduce a cycle of poverty. This study seeks to understand to what extent these links reinforce each other, how different farmer households conceptualize and experience rural poverty, and how they respond, resist, or abet it. Surveys, a household adaptive capacity indicator, and key informant interviews were employed to document the livelihood capabilities and assets needed to sustain farmer households amid social-ecological stress. Research findings conclude that farming households in San Blás are coping rather than adapting to system stress as they grapple with the social and ecological dimensions of their household vulnerability. Households maintain different adaptive strategies to alleviate stress, but often at the expense of other households and their environmental resources.