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Urbanisation has been a main cause of land use land cover (LULC) change worldwide, often with irreparable consequences to the provision of ecosystem services. Despite an increase in quantitative assessments of ecosystem service values (ESV) related to LULC changes, data are scarce for ecotones, such as the agreste in northeast Brazil (a transitional area between the Atlantic Forest and the Caatinga biomes). The benefit transfer method was used to quantify changes in ESV between 1989, 2007 and 2014 due to urbanisation in the microwatershed Riacho das Piabas (3660ha) in the agreste of Paraiba. Remote sensing techniques and a geographic information system were used to quantify LULC changes. Loss of arboreal vegetation (covering 46% of the study area in 1989 and 5% in 2014) was the key factor driving the 73.2% decline in the total ESV (from US$ 13.7 million to US$ 3.7 million in 2017 values). LULC changes resulted in losses of 89% in the estimated value of eight ecosystem services, including climate regulation, water flow regulation, moderation of disturbance, nutrient cycling and biological control, which are critical locally when considering the regional trend towards aridification and the existing pressures on water resources. Ecosystem functions loss and climate change impacts may lead to a shift in ecotone boundaries favouring the semiarid Caatinga vegetation. These results urge the implementation of ecosystem-based spatial planning, focusing on urban green infrastructure and restoration of natural habitats and their connectivity, to prevent further ecosystem service losses. Local estimates of ESV required to inform the suggested policy actions are identified.