Freshwater resources are uncertain in Palestine and their uncertainty is expected to intensify due to climate change and the political situation. Yet, in this region, a stable freshwater supply is vital for domestic and agricultural uses. Rainwater harvesting could help to increase freshwater availability. This study investigates the economic feasibility of two rainwater harvesting applications in the West Bank, with eyebrow terracing in olive groves in rural areas and domestic rooftop harvesting in urban areas. Cost-effectiveness is estimated using a spatially explicit cost–benefit analysis. Three land zones varying in suitability for the implementation of eyebrow terracing in olive groves are analyzed. The potential increase in olive yield is estimated with a crop–water balance model. The potential amount of rainfall that can be harvested with domestic rooftop harvesting is calculated based on the average rooftop area for each of the 11 governorates individually. Costs and benefits are considered at the household level to calculate the economic feasibility of these two applications. Although eyebrow terracing enlarges soil moisture availability for olive trees and thereby increases olive yield by about 10–14%, construction costs are too high to make implementation cost-effective. Similarly, rooftop harvesting can harvest about 30% on average of the annual domestic water demand and is worthwhile in the northern and southern governorates. Yet, in this case, construction costs are generally too high to be cost-effective. This obstructs more widespread adoption of rainwater harvesting in the West Bank, which is urgently needed given the large impacts of climate change. Providing subsidies for rainwater harvesting could help to make adoption more attractive for households.