Water losses along stream channels in the semiarid southwestern United States are of utmost importance when considering water disposition and water yields from a watershed. An analysis is described for estimating the disposition along a reach of a natural stream channel with a riparian vegetation and impermeable bedrock at a shallow depth. Results for one annual cycle are presented which indicate the quantity of water removed from the stream channel reach by various processes.Methods were adapted for the particular set of conditions to measure subsurface water flow and water storage in the channel alluvium. Subsurface water flow was calculated from Darcy's equation. Water storage was estimated from water content, water table elevation, specific yield and volume of alluvium measurements.Four distinct water‐use periods were apparent within a yearly cycle, each expressed by a separate water balance equation. Water losses by evapotranspiration were estimated from these equations. For example, 9 mm of water were estimated to be lost per day by transpiration of the riparian vegetation during the months of May and June, a time of water shortage in the area. Total depth of annual water loss by evapotranspiration from the channel reach was estimated to be 131 cm of water (4.3 acre‐feet/acre).