Biophysical and social systems are linked to form social-ecological systems whose sustainability depends on their capacity to absorb uncertainty and cope with disturbances. In this study, we explored the key biophysical and socio-cultural factors underlying ecosystem service supply in two semiarid watersheds of southern Spain. These included variables associated with the role that freshwater flows and biodiversity play in securing the system’s capacity to sustain essential ecosystem services and their relationship with social demand for services, local water governance, and land-use intensification. Our results reveal the importance of considering the invisible dimensions of water and biodiversity, i.e. green freshwater flows and trait-based indicators, because of their relevance to the supply of ecosystem services. Furthermore, they uncover the importance of traditional irrigation canals, a local water governance system, in maintaining the ecosystems’ capacity to supply services. The study also highlights the complex trade-offs that occur because of the spatial mismatch between ecosystem service supply (upstream) and ecosystem service demand (downstream) in watersheds. Finally, we found that land-use intensification generally resulted in losses of the biophysical factors that underpin the supply of some ecosystem services, increases in social demand for less diversified services, and the abandonment of local governance practices. Attempts to manage social-ecological systems toward sustainability at the local scale should identify the key biophysical and socio-cultural factors that are essential for maintaining ecosystem services and should recognize existing interrelationships between them. Land-use management should also take into account ecosystem service trade-offs and the consequences resulting from land-use intensification.