The study to assess and evaluate factors contributing to scarcity of water and compute water poverty index (WPI) for identifying priority areas for interventions in Baga watershed was undertaken in Lushoto district, Tanzania. Specific objectives of this study were to identify and assess factors contributing to scarcity of water, compute WPI for villages and identification of priority areas for interventions in Baga watershed. Data were collected from households through questionnaire survey and PRA tools. Data analysis was done using Statistical Package for Social Science (SPSS). WPI values were calculated using equation developed by Sullivan (2002). The results indicated that, scarcity of water in Baga watershed was contributed by many factors including increased human activities, global warming; and other factors. The other factors were seasonal water variations, gender inequalities in water collection for households, water quality and quantity, sources of domestic water, physical characteristics and distances to water sources. Computed WPI components for Baga watershed were resource (81.9), Use (55.6), access (54.4), capacity (27.7) and environment (10.3). Environment component scored lowest due to effects of low human capacity in water management affecting more the environment component. Additionally, low human capacity contributed also to low score of access component. Priority areas for interventions in Baga watershed were identified to be capacity and access components. It was concluded that increased human activities in watershed, global warming, seasonal water variations, gender inequalities in collecting domestic water, physical land terrains and distances toii water sources contributed to scarcity of water in Baga watershed. And that for integrated natural resource management (INRM) in Baga watershed to bring intended results, priorities for interventions should be given to human capacity and access components of WPI. It is recommended that WPI should be studied in other parts of Tanzania to identify priority areas for interventions in water management.African Highlands Initiative (AHI) officials