This study investigated land-use and land-cover change in three hamlets and two state rubber farms in the Nan-e watershed of the Xishuangbanna prefecture of Yunnan province in Southwestern China. The overall objective of the study was to understand how state policies affected land use and land cover and how changes in these variables affected farmer vulnerability to economic, social, and political events. Emphasis was placed on the cultivation of rubber (Hevea brasiliensis), promoted in southern Yunnan province since the 1950s as a means to meet the demands of rapid economic development. The study combined remote sensing analysis with secondary data and in-field interviews in order to understand the coupling between land-use and land-cover change and farmer vulnerability in light of the geographic, historical, and sociopolitical situation.