Water fetching and firewood collection are among home activities which are part of the daily routine of many households in rural Ethiopia. Households spend large amounts of time for collecting water and firewood. Furthermore, water fetchers and firewood collectors are mostly agricultural laborers in Ethiopia. Fetching water and firewood reduce labor available for market related activities such as agriculture which affects productivity of these sectors negatively. Better access to water and energy services is expected to release labor for market related activities which can have economy wide impacts. This study investigates the economy wide effects of improved efficiency of water fetching and firewood collection activities. The study uses the 2004/05 Social Accounting Matrix (SAM) of Ethiopia which is updated and adjusted for the purpose of this study. The SAM is modified to account for a detailed representation of water fetching, firewood collection and leisure activities and commodities. Distinct water fetching, firewood collection and leisure activities are added to the SAM in accordance with household classification. The simulation scenario is an increase in the Total Factor Productivity (TFP) of both water fetching and firewood collection activities due to better access to water and energy services. In the same scenario, government’s deficit is increased to finance the cost of water and energy infrastructure. The simulation results indicate that employment of labour in agriculture, industry and service activities increased as a result of relocating the released labour from water fetching and firewood collection. This stimulates production in the destination sectors that leads to higher total domestic production and overall welfare is improved. Macro-economic indicators including GDP, total absorptions and export supply also increased as a result of better access to water and energy services. .