Watershed restoration is increasingly recognized as a critical strategy for enhancing hydrological pro cesses, ecosystem services, and environmental sustainability in semi-arid regions. This study investigates the impacts of restoration interventions on runoff dynamics, actual evapotranspiration (AET), and the economic valuation of ecosystem services in a restored watershed com pared to a control watershed in a semi-arid region of Iran over a 20-year period (2004–2024). Usingthe HEC-HMS model, we simulated daily hydro graphs, revealing that the restored watershed experienced a 50% reduction in annual runoff compared to the control watershed, alongside im proved water retention and more stable hydrologi cal responses (for example, reduced flood peaks and sustained baseflow). Seasonal hydrographs show peak rainfall in late winter to early spring, with restoration significantly reducing peak flows. AET analysis, derived from the MOD16A2 product, demonstrated sustained evapotranspiration patterns, driven by enhanced vegetation cover and soil moisture retention, as evidenced by 8-day time series data. The economic valuation of ecosystem services, based on 2024 prices provided by the Iranian Department of Environment, highlighted a substantial benefit in the restored watershed, with a total value of 3,773 USD/ha/year, surpassing the control watershed’s 2,730 USD/ha/year by 1,043 USD/ha/year. Regulating services, such as water regulation, erosion control, and carbon sequestra tion, exhibited the most significant gains, complemented by improvements in provisioning, supporting, and cultural services. From a cost benefit perspective, the net annual gain yields a payback period of approximately 5.1 years, indicating that the investment is recovered in a rela tively short timeframe. Moreover, the calculated benefit–cost ratio (BCR) of 1.75 over a 20-year horizon confirms that for every dollar invested, 1.75 USD is returned in economic value. These findings underscore the efficacy of integrating engineering (for example, check dams), biological (for example, hill drops and seeding) and management (for example, grazing exclusion) restora tion measures to enhance watershed resilience, mitigate flood risks, and deliver long-term ecolog ical and economic benefits. However, challenges such as scalability and maintenance costs require further exploration.

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