Although water quality is a valid purpose for watershed projects under the PL83-566 Watershed Protection and Flood Prevention Act, historically very few water quality projects have ever been implemented in Arizona. This is largely due to the difficulty in measuring "non-controversial" monetary benefits associated with positive water quality impacts and to policy biased in favor of those projects with a higher monetary benefit-cost ratio. These reasons, among others, has prompted NRCS field economists to seek alternate methods to measure project benefits and costs. While the direct measurement of water quality benefits would be the preferable method to use, IMPLAN, through regional economic impact analysis, provides a way of measuring another category of benefits that can be used in the economic analysis of watershed projects. The key to proper use of IMPLAN is the correct problem definition and accurate modeling of the local economy. The assumptions used in the analysis must be acceptable to the interdisciplinary team and the project sponsors.