This study tried to find a feasible method of role and management sharing of natural resources among natural resources users both upstream and downstream of a watershed. The case study was upstream of three subwatersheds in Central Java Indonesia, named Samba, Soka, and Pusur Watersheds. We found the problems of water shortage experienced by farmers in downstream areas were caused by (1) reduced discharge of water from the Pusur River; (2) increased sedimentation in rivers and irrigation infrastructure; (3) extensive damage to infrastructure, especially intake gate water upstream of the irrigation system; and (4) increased extraction of water for urban areas and private companies. Problems (1) and (2) are related to land use and land cover changes in the upper area; problem (3) is related to irrigation network management; and problem (4) is influenced by social and economic aspects. To tackle this problem, one or two alternative solutions can be used: decreasing water demand or increasing water supply. The Payment for Environmental Services method seems promising to implement in a watershed that has conflicts both upstream and downstream environment users.