But the idea is to read the pwm input
Why do you assume that you will get a PWM output from the sensor? Hall effect sensors typically output a pulse when there is a magnet nearby, and nothing if there is no magnet near. That sounds like a digital output to me.
Let's say that we have a normal pulse of about 10hz?
Is that a question? Or is it a statement?
Suppose you do get 10 pulses per second. That means that the pulses are 100 milliseconds apart. Any interval between pulses that exceeds 200 milliseconds would then indicate that the flow rate had dropped to half.
If the hall effect sensor triggers an interrupt on the RISING edge, then the ISR could record when the interrupt happened (using millis()). loop() could then compare now (obtained using millis()) vs. then (the time that the last interrupt happened). if the difference is greater than 200, then the flow rate has dropped by half.
The first step, obviously, is to determine exactly what you get from the sensor/circuit you have. Then, you can determine how to use the data.