The Merguellil catchment (central Tunisia) is a typical Mediterranean semi‐arid basin, which suffers from regular water shortage aggravated by current droughts. Over recent decades, the continuous construction of small and large dams and soil and water conservation works (i.e. contour ridges) have taken place within this watershed. However, little is known about the effect of these water‐harvesting systems on the water balance components of arid or semi‐arid basins. In this paper, we present the results of a study, which evaluates the impact of the contour ridges on water balance components and erosion at basin scale by using the soil and water assessment tool model (SWAT). Large dams were modelled as reservoirs, small dams as ponds and contour ridges as potholes that fill with water and increase the percolation into the aquifer. The model predicts that contour ridges produce annually a reduction of 32 and 21% in surface run‐off and river discharge, respectively, and an increase in aquifer recharge of 50%. At the same time, retention of a large proportion of entrained sediment (26%) was modelled.