Participatory monitoring allows communities to understand the use and management of local water resources and at the same time develop a sense of ownership of environmental information. The data generated through participatory monitoring of stream flow and rainfall generate evidences to corroborate local people's experiences with changing water resources patterns. In this study we evaluate the potential of participatory monitoring of hydrological variables to improve scarce water supply utilization in agriculture. The case study site is the Mustang district in Nepal, which is located in the upper Kaligandaki river basin in the Himalayas with unique and complex geographical and climatic features. This region is characterized by a semi-arid climate with total annual precipitation of less than 300 mm. Water supply, agricultural land, and livestock grazing are the key ecosystem services that underpin livelihood security of the local population, particularly socio-economically vulnerable groups. An analysis of the measured stream flow data indicate that annual flow of water in the stream can meet the current crop irrigation water needs for the agricultural land of the research site. The data provide local farmers a new way of understanding local water needs. Participatory monitoring would contribute to an optimization of the use of ecosystem services to support economic development and livelihood improvement.