There are many water-related human interventions that modify the natural hydrological systems of watersheds. Rainwater harvesting (RWH) is such an intervention that involves harnessing of water. Water harvesting used in upstream prevents surface runoff to downstream impacting biodiversity and ecosystems. The main objective of the study is to assess the effects of water harvesting technologies on downstream water availability in Alaba District, Ethiopia. The Soil and Water Assessment Tool (SWAT) model, cost-benefit ratio, and optimal control approach (OCA) were used to analyze the hydrological, socioeconomic impact and trade-offs on water availability of the community, respectively. The downstream impact of increasing water consumption in the upstream rainfed areas of the Bilate and Shala watershed is simulated using the semi-distributed SWAT model. The two land use scenarios tested at sub-basin levels for the conventional land use represent the current land use practice (Agri-CON) and infield rainwater harvesting (IRWH) for improving soil water availability through RWH land use scenario. The simulated water balance results showed that the highest peak mean monthly direct flow was obtained from Agri-CON land use (12.71 m(3)/ha), followed by Agri-IRWH land use (11.5 m(3)/ha). The Agri-IRWH scenario reduced direct flow by 10 % compared to Agri-CON and more groundwater flow contributed by Agri-IRWH (190 m(3)/ha) than Agri-CON (125 m(3)/ha). The overall result suggests that the water yield of the area may not be negatively affected by the Agri-IRWH land use scenario. The technology in the district benefited positively having an average cost-benefit ratio of 4.2. Storage tanks, series of check dams, and gravel filled dams are alternative solutions for water harvesting.