Erosion and flooding in the Cusco watershed have increased over the last 30 years due to urban growth and incorrect use of natural resources. New data for a section of the watershed were created with satellite image, spatial data, and geoprocessing software including Erdas Imagine 9.1 and ArcInfo and free information and software in the public domain on the internet. AGWA2.0 - SWAT modeling software used the data to assess the actual conditions of the study area (Model 1) including sediment yield, water yield, percolation, and stream flow. Then, two models were created by altering the conditions of the land cover/use grid: Model 2 changed the bare soil class into contour trenches, and Model 3 changed bare soil class into trees or forest. A comparison of Models 2 and 3 with the current state (Model 1) found that forestation, Model 3, would greatly decrease flooding and increase water infiltration.