When waterfall is turned on pool level decreases what would cause the pool to start draining?

If it is a rather large waterfall, the water is filling up the bowls in the waterfall till it spills over back into the pool. If you have to keep adding water after using the waterfall it could be a leak in the waterfall itself. If you don't have to add water when the waterfall is not in use and you do when you use it, well, guess what? Probably a leak in the waterfall. If it is a natural rock waterfall look for cracks in the grout between rocks. If artificial rock, look for cracks everywhere.