Physical water deprivation at the midpoint level is assessed in water-related LCIA methods using water scarcity indicators (e.g., withdrawal-to-availability and consumption-to-availability) at the river basin scale. Although these indicators represent a great step forward in the assessment of water-use-related impacts in LCA, significant challenges still remain in improving their accuracy and relevance. This paper presents a methodology that can be used to derive midpoint characterization factors for water deprivation taking into account downstream cascade effects within a single river basin. This effect is considered at a finer scale because a river basin must be split into different subunits. The proposed framework is based on a two-step approach. First, water scarcity is defined at the sub-river basin scale with the consumption-to-availability (CTA) ratio, and second, characterization factors for water deprivation (CFWD) are calculated, integrating the effects on downstream sub-river basins. The sub-river basin CTA and CFWD were computed based on runoff data, water consumption data and a water balance for two different river basins. The results show significant differences between the CFWD in a given river basin, depending on the upstream or downstream position. Finally, an illustrative example is presented, in which different land planning scenarios, taking into account additional water consumption in a city, are assessed. Our work demonstrates how crucial it is to localize the withdrawal and release positions within a river basin.