Water resource management is an integral part of any sustainable development scenario. It plays a critical role, both in environmental issues and development issues, but most of the time, development and environment have not been looked at in an integral way. It is suggested in this research, that watershed management, which involves managing land use, water resources, human activities, within a management unit of a watershed, is an important tool for sustainable development involving environmental and development issues and can be used effectively to develop policies for sustainable development in a holistic way. In this research, a framework has been built, wherein it is shown how technology like hydrological/water quality models can be used effectively within the limits of a watershed to develop policies for land use and water resources so as to lead to sustainable development. This research is an effort to further the ongoing discourse on sustainable development. Various existing concepts in the literature have been applied to develop this framework. In this framework, watershed sustainability has been defined. It is then quantified by defining social, environmental and biodiversity indicators. By providing weightage to these indicators, a watershed index is built. The watershed sustainability is then calculated based on the concepts of reliability, resilience and vulnerability.

To implement this framework, the watershed for the case study has been selected from the southern Delaware region of the US. The watershed used is Millsboro Pond watershed, which is a part of the Inland Bays basin. Based on the watershed management principles, four land use scenarios have been created in GIS. The first scenario used is the existing land use. The second scenario has been based on the recharge potential of the watershed and the third and fourth scenarios have been built by also considering riparian buffer zones along with recharge potential. The Soil and Water Assessment Tool (SWAT) has been used as a hydrology/water quality model. The Millsboro Pond watershed is first modeled by using SWAT. This included calibrating and validating the model. The existing land use layer in the model is then replaced by the different scenarios of land uses and the model run for 50 years in future. The output from the SWAT is used to calculate watershed indicators and a watershed sustainability index for all the land use scenarios. Based on the results the land uses have been ranked for sustainability and policy implications have been discussed. The output from the model has also been used to suggest supply side and demand side management for the watershed.