Forests play a major role in the water cycle and help stabilize water tables and maintain freshwater supplies. They do this by promoting precipitation, providing shade and mulch to reduce surface evaporation, and slowing down rain run-off (giving it time to soak into the soil).
"Trees regulate water supply, keeping it available for their own needs and for those of other plants, for humans and other animals. The roots of the great forest trees penetrate deeply into the earth and draw up great quantities of water which pass through the trees and out through the leaves to create "oceans of the air". Thus the water is kept available for rain. Trees may deprive plants grown immediately beneath but help those at a distance. Forest height and the cooling effect of the water transpired by the leaves can promote rain in the same way as mountain ranges that force the rain clouds to rise and cool. Paul Schreiber, the meteorologist, estimated that a region covered with forest increased rainfall to the same degree as elevating it 350ft.
When rain falls on forest canopies, its force is broken by the leaves and branches so that it seeps gently through the forest debris to replenish the water tables below. Sinking wells where there are no tree belts in the area to maintain water tables can be a dangerous living off capital. Water running off of bared hillsides carries away the soil, not only depriving the uplands but also silting up dams and reservoirs and causing rivers to flood." -- from the essay Trees for a Future