Watersheds define a terrain united by the flow of water, nutrients, pollutants and sediment. Watersheds also link foresters, farmers, fishers and urban dwellers in intricate social relationships. Both factors - the biophysical attributes and the policy and environments - shape people's livelihoods and interactions within the watershed.<br /> <br /> Watersheds are simultaneously managed at various social and spacial scales, from community-level catchments to transnational river systems and lake basins. The flow of water, soilds, nutrients and other materials across a landscape extends the consequences of decisions about resource use well beyond the individual land user or manager. These flows produce both positive and negative downstream outcomes (or externalities). Upstream pollution by agricultural chemicals can expose downstream users to economic and health costs. More positively, upstream soil erosion can transport fertile soil that can enrich downstream rice paddies or other fields. Because watersheds have such broad impacts at so many levels, they raise special issues for the management of resources through property rights and collective action.