The conversion of coastal wetlands into aquaculture ponds is a common practice in South-East Asia, yet there lies a significant gap in analyzing its impacts on the delivery of ecosystem services. This study integrates multiple datasets to assess trade-offs in ecosystem services of a Ramsar wetland due to its conversion into aquaculture ponds in the coastal region of Indian peninsula. Local perceptions of ecosystem services and attitudes toward the Kolleru wetland were gathered using a standardized questionnaire, while land system changes from 1975 to 2023 were analyzed using Landsat imagery. The findings indicate that Kolleru wetland provides numerous ecosystem services ranging from local to global significance. The wetland functions as a vital habitat for migratory waterfowl including threatened species and serves as a natural buffer against floods and storm surges in the coastal area. Socioeconomic assessments revealed that the Kolleru wetland supports livelihoods by supplying fish, food, fodder, and medicinal plants. Chi-square (χ2) analysis showed that perceptions and attitudes are strongly influenced by educational background and patterns of resource use (χ2 = 4614.3, p =< 2.2e−16). The respondents perceived greater monetary benefits to fishponds (11488.5 million USD/yr) and paddy fields (0.58 million USD/yr) compared to the natural wetland. Nevertheless, the intact wetland delivers a variety of provisioning, regulating, supporting, and cultural services. Land use land cover analysis revealed a dramatic shift, with aquaculture expanding from 10% of the wetland area in 1990 to 57% in 2023. This transformation has led to significant trade-offs in ecosystem services, including habitat loss for migratory birds, disruption of water flow, and reduced flood storage capacity. The study emphasizes the need for effective management strategies that balance wetland conservation with the socioeconomic needs of local communities.