AbstractBrazilian semi‐arid regions are characterized by water scarcity, vulnerability to desertification, and climate variability. The investigation of hydrological processes in this region is of major interest not only for water planning strategies but also to address the possible impact of future climate and land‐use changes on water resources. A hydrological distributed catchment‐scale model (DiCaSM) has been applied to simulate hydrological processes in a small representative catchment of the Brazilian northeast semi‐arid region, and also to investigate the impact of climate and land‐use changes, as well as changes associated with biofuel/energy crops production. The catchment is part of the Brazilian network for semi‐arid hydrology, established by the Brazilian Federal Government. Estimating and modelling streamflow (STF) and recharge in semi‐arid areas is a challenging task, mainly because of limitation in in situ measurements, and also due to the local nature of some processes. Direct recharge measurements are very difficult in semi‐arid catchments and contain a high level of uncertainty. The latter is usually addressed by short‐ and long‐time‐scale calibration and validation at catchment scale, as well as by examining the model sensitivity to the physical parameters responsible for the recharge. The DiCaSM model was run from 2000 to 2008, and streamflow was successfully simulated, with a Nash–Sutcliffe (NS) efficiency coefficient of 0·73, and R2 of 0·79. On the basis of a range of climate change scenarios for the region, the DiCaSM model forecasted a reduction by 35%, 68%, and 77%, in groundwater recharge (GWR), and by 34%, 65%, and 72%, in streamflow, for the time spans 2010–2039, 2040–2069, and 2070–2099, respectively, could take place for a dry future climate scenario. These reductions would produce severe impact on water availability in the region. Introducing castor beans to the catchment would increase the GWR and streamflow, mainly if the caatinga areas would be converted into castor beans production. Changing an area of 1000 ha from caatinga to castor beans would increase the GWR by 46% and streamflow by 3%. If the same area of pasture is converted into castor beans, there would be an increase in GWR and streamflow by 24% and 5%, respectively. Such results are expected to contribute towards environmental policies for north‐east Brazil (NEB), and to biofuel production perspectives in the region. Copyright © 2010 John Wiley & Sons, Ltd.