Groundwater plays a vital role in human welfare in rural Africa. Despite this commonly held view, the conceptual understanding of the relationship between water and welfare is poorly developed and is not underpinned by longitudinal analyses. Understanding the linkages between water and welfare is critical to unlocking the potential of groundwater for poverty reduction. This thesis explores the associations between water and welfare by applying a framework that considers groundwater as a part of a socio-ecological system linking resource availability and quality with social systems managing and using the resource for domestic and productive uses. The framework provides a flexible diagnostic tool to characterize and explore the interactions and outcomes between water and welfare. The framework is applied in coastal Kenya where high poverty rates and heavy dependence on groundwater interact with unprecedented economic change. A three-panel longitudinal survey of 3,500 households collecting information on socioeconomic factors, household water supply sources and uses, as well as automatically transmitted information on handpump volumetric usage provide data for the analysis. The thesis examines the internal coherency and agreement between multidimensional and subjective welfare indices to detect their capacity to spatially identify dynamic welfare heterogeneity. The thesis explores the links between groundwater and welfare using multidimensional welfare metrics versus drinking water services, productive uses of water, groundwater table depth and dependency. The thesis models welfare transitions to prioritise sustainable development interventions. Findings suggest that a multidimensional welfare index that uses a small basket of indicators to measure, monitor and map short term welfare changes is robust and converges with subjective welfare measures. Water and welfare associations show that the poor are characterised by greater dependency on shallow groundwater systems, less acceptable drinking water services by reliability, affordability or accessibility but not quantity, with productive use of groundwater for livestock accruing to the non-poor groups. Overall, water services are observed to explain less than a fifth of the variation in welfare with gendered differences emerging by sex of the household's heads. Female-headed households are more vulnerable than male-headed households with welfare transitions suggesting over half of the population is in and out of poverty and a tenth are chronically poor at any point in time. Modelling welfare transitions reveal four priority goals to move people out of poverty: improving water services, maintaining primary education while broadening access to secondary education, increasing access to energy sources and ending open defecation. The findings reflect the complex nature of the interlinkages between water and welfare across different social groups and the potential for cross impacts. The frameworks provide a simple tool to guide interventions which prioritise sustainable development and accelerate attainment of UN Sustainable Development Goals 1 and 6.