Sacred groves have significance in socio-culture and biodiversity conservation. This study evaluated local people’s perceptions regarding conservation of sacred groves for water services, through willingness-to-pay (WTP), willingness-to-accept (WTA) and willingness-to-labour-work (DLP). Data were collected through a pre-tested questionnaire from 107 randomly selected households in 18 villages of Uttarakhand. The villages were categorised into 3 classes (core, nearby, faraway) based on proximity to the forests. The contingent-valuation method was used to evaluate WTP [Rs 3,802 (≈$57)] and WTA [Rs 38,224 (≈$571)] for water as an ecosystem service and statistical analyses were performed to evaluate whether factors such as gender, age, household income and location explained differences in the parameters. It was found that gender had a significant impact on WTP, with women having higher WTP, and that location had significant impact on WTA. The result shows that WTA increased with increasing distance from the sacred groves (Rs 43,077 + 21,139 in faraway villages and Rs 35,323 + 10,483 in core villages). The results indicated that consideration of gender inequality and education status in villages should be included in planning and decision making about participatory forest management of sacred groves. These findings facilitate forest resource management in mountains and provide guidance for programmes and policies dealing with irrigation, drinking water and community development. © 2021 The Authors