This thesis is the result of assessments on the extent of existing resource use and management practices using a Participatory Integrated Watershed Management (PIWM) as a viable approach to promote best soil water conservation (SWC) measures towards more sustainable land use. The study was conducted in two contrasting agro-ecological zones of the north-western highlands of Rwanda, namely; Gataraga and Rwerere in the framework of “Agasozi ndatwa” referred to as PIWM. "Agasozi ndatwa" program is implemented at watershed scale and involves investments from the government in establishing soil and water conservation structures as well as other development related activities. A stratification sampling approach was used in selecting the study area. The first strata consisted of a watershed and the second-level of strata consisted of villages. Two villages with boundaries that nearly coincided with that of the micro-watershed were selected.The studywas started by assessing the ecological and economic sustainability of smallholder farms using the level of nitrogen recycling between farm activities and farm income as indicators. Soil fertility management components including farm inputs and improved farming systems combined with the knowledge on how to adapt these practices to local conditions at field, farm and watershed levels were evaluated. Following a proper participatory assessment of soil and water conservation, a field experiment was conducted to explore the efficiency of 20+ year old slow forming terraces in farmer’s fields. Finally, the impact of PIWM activities on Natural Resource Management (NRM), crops and livestock productivity on farmers’ livelihoodwas assessed and the integration of several policies that are operating simultaneously in the watershed was evaluated.Nutrient balances and flows differed for the two agro-ecological zones due to differences in crop management and the importance of livestock. Positive nutrient balances were found for relatively fertile volcanic soils, but on steep slopes and acidic soils, N, P and K stocks were declining at rates of 8.6, 1.4 and 17.5 kg ha-1 year-1, respectively. Nitrogen recycling between farm activities was low, varying between 1.8 and 6 %, which may decrease the adaptability and reliability of the current farming systems. Integrated Soil Fertility Management (ISFM) component treatments comprising thecombination of fertilizer, FYM and improved seeds significantly increased yields but resulted (i) in a lower Nitrogen Agronomic Efficiency (N-AE) across sites and on relatively fertile foot slopes and (ii) in a lower marginal rates of return (MRR) due to the high cost of seeds and N fertilizer. Slow forming terraces of 20+ year old showed a marked “within” spatial difference in both soil quality and crop yield. The soil in the lower part of the terraces showed as much as 57% more organic carbon content and 31% more available phosphorous than the soil in the upper part. The marked soil fertility gradients indicate that the sustainability of slow-forming terraces is threatened, unless a site-specific fertilizer strategy is developed. Results suggest that an PIWM approach has the potential of improving farmers’ livelihoods and increasing the resilience of a degraded environment. Furthermore, due to PIWM approach, synergy of policies was effective leading to (i) positive impact on the size and composition of livestock, (2) the availability and use of manure, (3) the increase of production of fodder and (4) the reduction of soil loss.