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Watershed development and management practices (WDMP) have become essential to rural livelihood development. However, studies related to the livelihood implication of WDMP should have been considered. The present study assessed the impacts of WDMP on the livelihoods of watershed practitioners and non-practitioner households in the central highlands of Ethiopia. The investigation showed that the difference between practitioner and non-practitioner households’ total livelihood status was insignificant; both ranged in average level indexed within 0.34–0.66. The impact analysis result revealed that due to the implemented WDMP, the agricultural productivity and incomes of the community increased, employment opportunities were generated, and social service and infrastructure were improved. As WDMP increases by one standard deviation, agricultural productivity, income, employment generation, and social service and infrastructure increase by 0.555, 0.493, and 0.461 standard deviations, respectively. This is in addition to any direct (unmediated) effect that WDMP may have on agricultural productivity, income and employment generation, and social service and infrastructure. The study suggests that the community needs to improve natural and social capital for agricultural productivity. Besides, policymakers and non-governmental development-oriented organizations need to invest in natural, social, and physical capital to improve the social service and infrastructure of the study area. Furthermore, the government must identify and promote human, financial, physical, and natural capital elements that increase the study area’s income and employment generation opportunities.

The impact of watershed development and management practices on rural livelihoods: A structural equation modeling approach