Community-based water storage in semi arid areas can help to adapt to climate change and mitigate household water shortages. Since little is known on the downstream effects of local water storage, this study employs a water balance model to perform a catchment scale assessment of upscaling local scale water storage in sand dams. The impacts of increasing water storage is evaluated under current climate conditions and future climate change scenarios. Survey information is used to estimate current and future water demand and assess the benefits derived from current sand dams in the Ethiopian study area. Using an indicator of the environmental flow concept, downstream hydrological impacts are simulated for different scenarios. Storage by 613 dams, supplying water to 555,000 people, has no impact on environmental flow downstream of the sand dams. Storage by 2190 dams leads to a modest increase in the number of months with low flow (4 to 9 %). Projected climate change leads to a larger increase in the number of low flow months of 0 to 29 %. Joint climate change and maximum storage scenarios cause an increase in low flow months from 4 to 50 %. Under the most extreme climate change projection 4.5 % of the wet season discharge is stored in sand dams. Because of the local benefits of improved water supply and the acceptable range of downstream impacts, sand dams appear to be a viable way for supplying drinking water in this catchment as well as in other semi-arid regions with similar conditions.