This paper examines the linkage between resource scarcity and conflict during the 2012 Lake Chilwa water level recession. Ecosystem degradation and resource scarcity negatively affect many poor people dependent on aquatic systems such as river floodplains and wetlands. The need to identify and implement innovative measures to manage the scarce resources in these systems has sometimes resulted in conflicts among the various resource users such as fishers, farmers and political groups. However, the direct causal links between resource scarcity and conflict are contested and the evidence base is weak. Using empirical evidence from focus group discussions and in-depth interviews conducted at Chisi Island of Lake Chilwa as a case study, we define the governance groups (vertical and horizontal) and the direct causal links between environmental scarcity and conflict during the 2012 lake recession. We argue that the actual risk of increasing conflicts caused by resource scarcity will depend on the level of vulnerability of populations, ecosystems, economies and institutions in the context of authority, legitimacy and capacities to effectively manage resource scarcity.