Small hill reservoirs in arid North Africa face accelerating threats from soil erosion and siltation, yet integrated assessments linking erosion dynamics, water quality, and soil fertility remain scarce. This study presents a multi-component geospatial assessment of the 345 km² Es-Sabba watershed in the Saharan Atlas of southwestern Algeria. Soil loss was quantified using the revised universal soil loss equation (RUSLE) integrated with Sentinel-2 imagery, a 30 m digital elevation model (DEM), and GIS analysis for 2016–2025. The mean annual soil loss reached 26.3 t/ha/yr, with 68.4% of the watershed under high-to-severe erosion; topography and vegetation cover were the dominant controls. Estimated sediment delivery to the reservoir is 135,300 t/yr, projecting a functional lifespan of 11–15 years without intervention. Hydrochemical analysis classified reservoir water as alkaline- and sulfate-rich, yet suitable for irrigation with very low sodicity risk (sodium adsorption ratio, SAR = 0.08) and an excellent Irrigation Water Quality Index (IWQI = 91.75). Soils exhibited low-to-moderate fertility (mean soil fertility index, SFI = 0.416), with widespread nitrogen deficiency constraining vegetation-based erosion control. The integrated framework identifies circular-economy opportunities through nutrient-rich sediment reuse and provides actionable guidance for climate-resilient reservoir management in arid catchments.