Book excerpt: Ongoing debate over water resource management in the Nile basin and continuing land degradation in agricultural areas of Ethiopia suggest a need for efficient mechanisms to improve agricultural output in the Blue Nile basin in Ethiopia. Numerous econometric and hydrological models have been developed to assess the effects of sustainable land and watershed management (SLWM) investments, however these models fail to address the trade-offs faced by rural farmers in maintaining such structures. This study combines household survey data that evaluates the economic determinants of program sustainability with a detailed hydrological model that explores location specific effects of SLWMstructures.Household survey analysis suggests that households that invested in SLWMinfrastructure on their agricultural plots between 1992 and 2002 and subsequently maintained those structures had a 24 percent higher value of production in 2010 than farming households that did not make such SLWM investments. The location specific hydrological model analysis suggests that terraces on middle and steep slope areas have the largest benefit in terms of decreased runoff and sediment and increased agricultural yields. Utilizing the results from the econometric and hydrological model, a systems model is constructed to analyze investment packages. Results suggest that the benefit of implementing only terracing on steep and mid-slope terrain does not outweigh the cost of foregone off-farm labor opportunities nor compensate for a fall in the price of agricultural output (due to increased supply). However, more comprehensive investments (such as increased fertilizer use with SLWM) show economically significant increases in household income, suggesting that a packaged investment approach is needed to reap welfare benefits from investments in SLWM infrastructure at farm level.