Sustainable development is a recent but widely promoted mode of development paradigm all over the world. Academic scholars as well as politicians insist the world community to implement this newly evolved dev clopment path <o as to integrate economic development with social development and protection of world ecology. Ihe current legal and policy atmosphere of Ethiopia is triggered towards this development modality by recognizing as an appropriate development strategy lo overcome rhe deep rooted poverty by promoting agricultural Jed industrialization economic development pattern with equal attention for social development activities as well as environmental protection cndeav or to achieve climate change resilient economy and social equity. 1\11 integrated am! participatory sustainable watershed development i<; recommended by many researchers us an appropriate means to achieve sustainable development in a given watershed. This could be practical when local communities in a given micro watershed enables to acti vely participate in planning. implementing and evaluating watershed development activities and only when ll1t:) can benefit from this program. The Arnhara i\ational Regional Stale enacted watershed management proclamation to be used for the administration and use of watersheds rehubilrtatcd and being rehabilitated h) community participation. This paper therefore analyzed the- relevancy of this proclamation in auaining the economic development, social development and environmental protection pillars of sustainable development. Jn addition to the legal analy sis. this parer tries to assess the effectiveness or otherwise of integrated watershed management of Chenctale. Scdic Dimer Gedel and Shimbudi micro watersheds by examining l11l: economic activities. social issues and activ iues in protecting the ecology. The dissertation conclude that proclamation 204/2013 enables the watershed to he an essential place to improve economic gain, to facilitate social benefits and to protect the environment in an integrated manner without significant conflict among these pillars. However. it needs some amendment and also requires some progress in practicing this principle at watershed level. Key words/phrases: Sustainable Development, Watershed Management, Land Degradation, Natural Resources. Integration