Ongoing debate over water resource management in the Nile Basin and continuing land degradation in agricultural areas of Ethiopia suggests a need for efficient mechanisms to improve agricultural output in the Blue Nile Basin. Over the last two decades, the Ethiopian government has invested in a range of sustainable land and watershed management (SLWM) programs in an effort to increase agricultural yields in the highland region of Ethiopia. Numerous econometric and hydrological models have been developed to assess the effects of SLWM investments, however these models fail to address the direct and indirect 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 SLWM structures. Utilizing analysis from the economic and hydrological models, an integrated systems model is constructed in order to take into account both biophysical changes due to SLWM investments and economic components that shape program uptake and success. Household survey analysis suggests households that invested (during 1992-2002) and maintained SLWM infrastructure on their agricultural plots had a 24 percent higher value of production in 2010, however significant increases in value of production are not present until SLWM structures have been in place and maintained for at least 7 years. The location specific hydrological model analysis suggests that terraces on middle and steep slope areas (slopes greater than 5 degrees) 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, a variety of modeled packaged investments (such as increased fertilizer with SLWM) show economically significant increases in household income compared to the base, suggesting that a more comprehensive investment approach is needed in order to reap welfare benefits envisioned by SLWM investments.