In Northeast Brazil, more than 70,000 small dams retain superficial runoff and underground water flow, creating small reservoirs. Recession agriculture consists of cropping the margins of the reservoirs, on slight slopes, while the water level progressively decreases, and it is a widespread cropping system in this area. The water balance for this particular system was quantified on two contiguous plots, one with “Marreca” grass (Paspalum conjugatum Berg.), a forage crop, and the other one on bare soil, in the recession zone of the basin of Flocos dam, municipality of Tuparetama, PE (7°36′S and 37°18′W). The soil, classified as Fluvent, consists of a superficial clay textured layer overlying a sandy layer. Next to the dam, a meteorological station was installed, equipped with automatic sensors for recording rainfall, air temperature and wind speed, and pan evaporation. In the reservoir, the water level was recorded. The plots were instrumented with one neutron probe access tube, one piezometer and tensiometers at different soil depths. Water retention and hydraulic conductivity characteristics were determined through field and laboratory measurements. The water balance was determined for the cropped and the bare soil plots, during 67 days. Average values for the actual evaporation and evapotranspiration rate, were respectively 5.0 and 8.0 mm day−1, with an average reference evaporation rate of 8.7 mm day−1. The contribution of the aquifer recharge to evaporative demand was estimated and found to be very important. Field observation and the estimated aquifer recharge from the reservoir suggest the presence of preferential flow. The study of water dynamics in this system is fundamental for establishing a basis for the sustainable development of agriculture in this area.