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Global demand for freshwater is increasing as human population grows, climate changes and water resources are being overexploited. Consequently, many freshwater ecosystems, particularly in water-stressed regions, are severely degraded. Here we present a unique case of an Interbasin Water Transfer (IWT) project aiming at ecosystem rehabilitation and recreation enhancement of an intermittent transboundary stream (Ayun, Israel). For the past century, water diversion at the Lebanese side had led to flow secession in the Israeli Ayun Nature Reserve during the dry season (May–November). To restore flow continuum, a sum of 0.5 million cubic meters of high quality freshwaters have been allocated annually during the dry months. The aim of this study is to evaluate the IWT project by: (1) examining the correlation between water flow in the Ayun and recreational visitation, and (2) performing a cost-benefit analysis of the IWT scheme, including non-market benefits. A time-series regression (Adj. R 2 = 0.688, n = 125) shows that a 10% increase in water flow corresponds to a 2.1% increase in monthly visitors. An estimated 18.8% of the visitation rate between 2009 and 2015 can be attributed to the water reallocation project. Through a single-site travel cost model, we estimate the visitor's willingness to pay in US$ 37.8 per person per trip. When non-market benefits for recreation are included, the total benefits of the IWT project substantially exceed its costs. Our results suggest that IWT can be applied to restore water flow and enhance ecosystem services also in water-stressed regions. [ABSTRACT FROM AUTHOR]