Balancing water demand for socio–economic development and ecosystem stability presents a challenge for regional sustainable management, especially in drylands. Previous studies have indicated that large–scale ecological restoration projects (ERPs) lead to a decline in terrestrial water storage (TWS) in the Mu Us Sandyland (MUS). However, the effects of other human activities (e.g., cropland reclamation, coal mining) on water resources remain unclear, raising concerns regarding water crisis and human–natural system sustainability. Through the utilization of coal mine location data, we found that the impact of coal mass loss on the Gravity Recovery and Climate Experiment (GRACE) products cannot be ignored in MUS, especially in the coal–rich northeastern part. Combining these data with auxiliary datasets, we observed a significant (p < 0.05) decrease in TWS (−0.85 cm yr−1) and groundwater storage (GWS, −0.95 cm yr−1) in the MUS, with human activities accounting for 79.23 % of TWS and 90.45 % of GWS reductions, primarily due to increased agricultural and industrial water consumption. Agricultural water consumption increased 2.23 times from 2001 to 2020, attributed to enhanced water use intensity (62.6 %) and cropland expansion (37.4 %). Industrial water consumption in Shenmu, a representative coal county, experienced a 4.16–fold rise between 2001 and 2020. Despite these challenges, local governments have alleviated water stress, ensured food security, and increased household income by comprehensive management strategies, such as enhancing water–saving technology and enforcing stringent policies. Previous studies have overestimated the amount of water resources consumed by ERPs. However, ERPs has played a critical role in stabilizing the regional ecological environment and ensuring the region as a vital food and energy supplier. Our findings can guide for socio-economic development and water management policies in similar regions.
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