Climate change is affecting water quantity and quality, posing challenges particularly for what regards agricultural production. The use of nature-based solutions to address these challenges is increasing. Natural water retention ponds have been identified as viable solutions for water management in agriculture. This paper aims to characterize water retention ponds, to quantify their effectiveness, their direct and indirect benefits, and costs. The paper analyses the case of the Lamone river catchment in Emilia Romagna Region (Italy), where water flow and availability show large seasonal variability. This is an area of important agricultural production (particularly for kiwi plantations) heavily relying on irrigation. Here water retention ponds are systematically applied to store water in winter that can be used during the dry summer season. They can play a strategic role in ensuring irrigation water availability while preserving the minimum environmental flow. The paper analyses both the benefits of ponds for the water balance at sub-catchment scale, and the environmental effects produced by ponds having an ecological functionality. We refer to a scenario of implementation of new ponds, and we appraise the contribution of new ponds whose siting is chosen in order to maximize landscape connectivity. The hydrological effects of the new ponds are evaluated under present and climate change scenarios. We show how water retention ponds may increase water availability for irrigation, while improving the river flow regime. More water for irrigation can be associated to additional agricultural production, while a more ecologically oriented design of ponds may lead to landscape ecological improvements. The investment costs of ponds are justified in economic terms, and the additional costs of improved design are expected to be balanced by the ecosystem services obtained. The business model required to operate this type of intervention is discussed, together with potential funding channels. In particular, we discuss two innovative incentive models based on compensation of land and production lost and on tradable development rights.