To improve both surface and ground water quality in the highlands of Ethiopia, water quality monitoring and evaluating the effectiveness of watershed management interventions on water quality and runoff responses are crucial. This knowledge can aid in the design strategies to manage water pollution, reduce contamination and scale up the pilot watershed management projects to wider basin level developments. Therefore, the objectives of this dissertation were to evaluate the effect of watershed characteristics on groundwater quality and hydrological responses by investigate the regional distribution of nitrate, understand the spatial and temporal variability of shallow groundwater quality, determine the optimal focus of integrated watershed development, and evaluating effect of soil and water conservation practices on base flow contribution to total stream in the Ethiopian highlands. In order to understand the spatial and temporal groundwater quality variability in the upland watershed, we selected 19 wells located in the Tikur-Wuha watershed and monitored the water quality from July 2014 to June 2015 for chemical, microbiological and physical parameters. The result show that groundwater chemical concentrations and E. coli levels were greater in the monsoon rain phase than in the dry phase. Wells located down slope exhibited greater concentrations than mid- and upper-slope positions, except for the nitrate concentration that was less at the valley bottoms due to denitrification in the shallow groundwater. The E. coli levels were above the WHO drinking water standards. x To assess nitrate levels at large scale, we sampled 213 water supply points in a 4880 km2 area in northern Ethiopian. The results show that the average concentration was below the WHO health standard of 10 mg N-NO3 L-1. The average concentration in wells was 3.3 mg N-NO3 L-1 and in springs 1.8 mg N-NO3 L-1. Nitrate concentration in 45% of the sampled wells and springs exceeded the natural limit of 3 mg N-NO3 L-1. Only in three wells located in agricultural land, the WHO standard was exceeded. Wells in the agricultural fields had average nitrate concentration of 3.6 mg N-NO3 L-1 which was almost twice that of grazing land and four times that in upland wells. Spatially, the groundwater nitrate concentrations were greatest in North West to South Eastern parts of the South Gondar with agricultural lands on the moderate slopes. Thus, although this study indicates that currently nitrate levels are generally safe, caution is needed in the future since in areas with the moderate to low levels of fertilizers applied, nitrate concentration were elevated and could exceed the health standard when greater amounts of fertilizers are applied. To evaluate the effectiveness of soil and water conservation practices, two experimental watersheds were identified in the upper reaches of the Lake Tana basin: Tikur-Wuha and Guale watersheds. The sediment concentration and runoff discharge were monitored at the outlet of the two watersheds for three years before and after soil and water conservation practices were implemented. The results show that conservation practices marginally decreased direct runoff in both watersheds and increased base flow in the Tikur-Wuha watershed. Average sediment concentration decreased by 81% in Tikur-Wuha and 45% in Guale. The practices intended to increase infiltration were most effective in the Tikur-Wuha watershed because the deep soil could store the infiltrated water and release it over a longer period after the rainy season than the steeper Guale watershed with shallow soils. Therefore, implementation of soil and water conservation management practices should prioritize watersheds with deep soils and gentle slope. xi Subsurface flow in streams originates from shallow saturated groundwater zone of the Ethiopian highlands. It is a major portion of stream flow during dry and rainy seasons. The assessment of subsurface flow after land resources management is essential to evaluate watershed management. The objective of this study was to calcuate the ratio of base flow and total stream flow watershed before and after land management interventions. The Tikur-Wuha experimental watershed was selected for this study. The parameter efficient distributed model (PED) that has a small number of model parameter was developed for the highlands of Ethiopia was found to simulate the discharge satisfactorily. From the modelling result, groundwater flow index (GWFI) was calculated by divided the annual subsurface flow to the total stream flow to estimate the contribution of groundwater to the stream flow in the study period from 2010 to 2015. From the analysis, the groundwater contribution to surface water was significantly increased with the increase of hillside infiltration area and total rainfall amount. We found that the groundwater contribution was 53% in 2010 before land management interventions to 69% in 2014 after interventions. However, in 2015 the groundwater contribution decreased to 53% due to reduced total rainfall and drought period in the Ethiopian highlands. In addition, the model clearly showed a change in the degraded area (which decreased from 15% in 2010 to 5% in 2015) to hillslope infiltration areas influences magnitude GWFI. After the findings of the two pilot scale watershed have been scaled up to the Lake Tana basin, current strategies to reduce contamination in Lake Tana should be adapted to become more effective