In September-October 2006 a multidisciplinary team of researchers from the AHI Benchmarksite in Lushoto, the Agricultural Research Institute (ARI) – Selian in Arusha, the Agricultural Research Institute (ARI) – Mlingano, Tanga, the Association for Land use Environmental care Research and Technology Transfer (ALERT) in Tanga, the Tanzania Forest Research Institute (TAFORI) in Lushoto and the extension personnel from the District Council of Lushoto conducted a focused participatory resource diagnosis (PD) study in the villages of Mbelei, Kwekitui, Kwadoe, Kwehangala, Dule and Kwalei in Lushoto district. The six villages are what this document collectively refers to as the Baga Watershed. The objective of the study was to assess resource conditions and their management. Special bias was taken towards water and soil related resources and their management because these formed the foundations for the project for which this PD was conducted. The diagnosis was conducted in a participatory manner in which the study team combined use of a modified approach called PLAR (Participatory Learning and Action Research) and the AHI method Guide to engage the study communities, discussed with them resource conditions, their causes and proper action to be taken. The activity was also continuation of engagements which the AHI has been undertaking in the area for the last 3 years now. Results indicate that there is still significant degradation of water, tree and soil based resources in the Watershed villages. Water related resources like water streams, rivers, springs and wells are highly degraded and less productive than what they used to be 10-20 years ago. Many of the once permanent streams no longer produce water during the non-rainy months. In many of these villages water availability for irrigation is now a major source of social conflicts. Many farmers still report a declining trend in rainfall availability and its distribution within the seasons. Similarly yields per unit area for nearly all crops are falling with time. At the farm level the team observed significant soil erosion, lack of soil conservation practices, poor agricultural practices and falling soil fertility. Irrigated agriculture for vegetable and other horticultural produce is highly popular especially among the youth who have smaller landholdings as compared to their older fathers. The youth are practicing improved soil fertility management practices like fertilizer use in their fields which carry horticultural produce. Most of the important crops like coffee and banana which used to be irrigated during abundance of water are now practically rainfed and their actual acreage are declining. Many farmers point an acusing finger towards reduced precipitation as the reason for all the ills. Our team however, again confirmed four factors which contribute to the current water related conflicts and falling productivity from the fields; reduced amount of water from current water sources, increased water demand, excessive wastage of water through wasteful irrigation furrows and practices as well as poor distribution of irrigation water. To counter this trend in resource degradation our team discussed with farmers about the probable reasons for resource degradation and what could be done against it. The six villages have agreed to take actions that will progressively reverse the degradation of the water resources through collective action. They have in turn requested the project team to build their capacity in the utilization of efficient water utilization technologies and