Rainwater management and rainwater harvesting are vital for the resilience of social and agricultural systems in arid and semiarid regions. Nevertheless, the intensification of their use in the upstream areas of river catchments may result in the concentration of rainfall harvesting in the highland parts of the watershed, leading to changes in water allocation and to harms to lowland rural systems. The aim of this paper is to evaluate the impact of rainwater management and rainwater harvesting on upstream-downstream agricultural ecosystem services in two catchments located in Tigray Region (Ethiopia). Oda catchment, with no rainwater management, and Guguf catchment, under heavy water management, were considered for the evaluation of the different watershed management strategies. Participatory Rural Appraisal and field questionnaires were used to assess agricultural ecosystem services of watershed management in upstream and downstream areas for both catchments and a comparative assessment has been carried out. Results show that watershed management in both upstream and downstream part of Guguf catchment provided reduction of soil erosion, leading to an increased agricultural production, and to the increase of fodder and pasture availability, resulting in increased livestock production. In Oda catchment, heavy erosion problems and seasonal droughts remain unsolved. The analysis shows that watershed management in Guguf catchment triggered the implementation of irrigation system in the upstream areas. Due to this, farmers reported a decrease of water availability. The relationship between watershed management and the consequent implementation of new irrigation systems should be monitored to avoid potential conflict in the future.