Trees effectively behave as a buffer for the water cycle. Under conditions of high rainfall, they absorb a lot of water from the ground. Under conditions of low rainfall, they must nonetheless continue to release moisture via evapotranspiration, which promotes the production of rain in dry conditions. This mean that forested locations are more resistant to both floods and droughts.

Tree roots also greatly reduce erosion, which means that rainfall is more likely to end up in a few well-established waterways and less likely to be spread across numerous tiny rivulets; it also means that waterways are less likely to change shape over time. Large, stable waterways are much easier to collect water from (e.g., via dammed reservoirs) than small or unstable waterways.

However, I'm not sure how much of a factor erosion is here. I suspect it will only directly impact small communities that rely on minor waterways for drinking water. (Mind you, when small communities connect up to city water because their existing water supply becomes unreliable, that can affect the city's water supply.)