Ecological degradation is a growing concern, and efforts to restore landscapes to more pristine conditions have begun in different areas. However, this restoration work commonly proceeds without the benefit of appropriate theoretical guidance. In this paper, a new approach is presented to predict how the water balance may shift in response to different restoration scenarios. Ten ecological restoration scenarios with different land covers were simulated for the Nanhe River Basin, on the Longxi Loess Plateau, using the Soil and Water Assessment Tool (SWAT). Grassland was predicted to result in lower evapotranspiration and greater runoff compared to higher evapotranspiration and lower runoff for forest. Therefore, grass will be a preferred choice in ecological restoration practices in the Nanhe River Basin. This paper demonstrates the value of SWAT when predicting hydrological responses to ecological restoration at a watershed scale.