The award, also known as the "Nobel Prize for water" was won by Rajendra Singh, who is often called "the water man of India" for his work in making water much more accessible and available to people in around 1000 villages.
The water table had dropped as groundwater was sucked dry by farmers in many areas. Consequently crops failed, forests died off and wildlife disappeared.
Mr Singh uses a modern version of the ancient Indian technique of rainwater harvesting. His method of helping villages was to improve year round water management by building low level banks of earth to hold back the flow of water in the rainy season, so that it had more time to seep into the ground and replenish supplies before the dry season set in.
It is a cheap and simple technique, and judges of the competition for the prize at the Stockholm International Water Institute believe it could be applied worldwide. Further benefits of his technique were that floods were prevented, soil and rivers were restored, and wildlife was able to return.
They also said that his lessons were essential as climate change alters weather patterns round the World.