The methods developed in this study are for the purpose of assessing the potential of small-scale surface water impoundments, or ponds, to provide local water supplies and detain sediments from going to the main reservoir on the Wadi Zarat watershed, northwestern Libya. The Wadi Zarat watershed has an area of about 213 km2 and receives a mean annual rainfall of 270 mm. A stochastic rainfall model was developed to simulate rainfall. This model was then combined with a deterministic model to estimate runoff. A modification of the Soil Conservation Service runoff model was utilized. The results of the rainfall and runoff models were then used to estimate sediment yield using the Modified Universal Soil Loss Equation. Parameters for these models were obtained from data and studies on the Wadi Zarat watershed. A combined model that incorporates the rainfall, runoff, and sediment yield models along with equations to route the runoff and sediment through the ponds was developed. A FORTRAN V computer program was written to perform the tasks of the combined model. The computer program was designed to give the results for a set of pond performance criteria. These criteria were developed to provide an easy and comprehensive tool to compare the interaction of the pond with the rainfall, runoff, and sediment coming from a given watershed. To have a representative range of watershed-pond combination, a total of 8 watersheds, 8 ponds, and 2 seepage rates were examined. The models used gave satisfactory results and indicated a great potential for future use in other parts of the study area region and possibly other regions of the country. The results of the main model were used to develop relationships and guidelines that can be used by the planner to decide on a particular watershed-pond combination on the Wadi Zarat watershed. Equations to predict the optimum pond volume on a particular watershed size and characteristics were also developed. The study showed a great potential for small-scale surface water ponds on the Wadi Zarat watershed. The methods developed in this study are encouraging and open the door for future use in other parts of the country.