Forests provide wide range of ecosystem services and thereby help communities to derive many direct and indirect benefits. Forest watershed services of absorbing rain water and releasing it slowly, allowing it to seep into the soil preventing run-off with sediments helps communities downstream to maximise the benefits from crop cultivation (McNeely, 1995; Kramer el al., 1997; ICEM, 2003; Dudely and Stolton, 2008). Thus protection of forested habitats can yield both tangible and intangible benefits to the community (Chomitz and Kumari, 1998). The disturbance caused to forest cover has been shown to have negative impacts on soil, organic matter, nutrient availability and hydraulic characteristics and can thereby curtail services currently enjoyed by local communities (Mehta el al., 2008). Nevertheless, changes in forest cover could lead to either positive or negative changes in watershed services provided by them specific to the context (Lele and Venkatachalam, 2006) and sometimes protected forest ecosystems could negatively influence the probability of recharging the water resources reducing the income and employment opportunities in the command area (Lele el al., 2007). While the literature debates about the exact nature of benefits of protected catchments, the study has tried to assess what the beneficiaries realise from it. This paper presents results from a study conducted in the command area of an irrigation project dependent on a forested catchment.