Stakeholder participation is argued to have many advantages in the water sector and its application is becoming important in environmental management decision making processes, but it is relatively limited in the developing world. Holistic assessment and stakeholder participation are not commonly practiced in research works from Ethiopia. This study intends to seek solutions to reservoir development and management problems in Northern Ethiopia by linking upstream and downstream hydrological and sediment dynamics and by combining the physical functioning of the irrigation system within the landscape with the socio-economic functioning of the irrigation system and involvement of local stakeholders.