Water retention capacity in upper watersheds directly contribute to average river flow, which is very easy to show by the behavior of streams. Deserts are self-reinforcing systems where the heat pushes clouds up or away from them. Wet, cool forests draw in more precipitation in. We don't really understand the processes yet, but we do know it's not a zero sum game of delaying (or 'stealing') water versus total system flow. This is most easily demonstrated for watersheds on the windward sides of mountains, due to snow pack, but forests and microbes both fiddle around with cloud cover in general.
As for restoring watersheds, we systematically removed the engineers that created the lush river systems of the US and Canada, namely the beaver, which once numbered at somewhere between 60 and 300 million animals in North America. We blame long term changes in rain patterns for the reduced river flow, but I strongly suspect that is the '3 Whys' trap of the Five Whys Process.