Until recently, the water potential of the country was not accurately known, and even today this is still a contentious area. There have been different estimates of the irrigation potential of the country, and the issue has not been satisfactorily resolved. One of the earliest estimations was made by the World Bank (1973), which suggested a figure of between 1.0 and 1.5 million hectares. Recent estimates, however, place the figure somewhat higher. According to the Ministry of Agriculture (1986), the total irrigable land in the country measures 2.3 million hectares. The International Fund for Agricultural Development  (IFAD 1987), on the other hand, gives a figure of 2.8 m, while the Office of the National Committee for Central Planning¿s 1990 figure, which is based on WRDA's estimations, is 2.7 m.. The Indian engineering firm Water and Power Consulting Services¿ 3.5 m ha. is the highest estimate so far and EVDSA accepted the figure and was using it in the early 1990s. Most of these figures are derived by adding up the irrigation potential of the country's eight river basins as shown in Table 1 below. Except for the Awash River and the Rift Valley lakes, all the other basins are part of the major trans-boundary river systems that drain out of the Ethiopian highlands and flow into the neighbouring countries of Sudan, Kenya and Somalia. 

In the 1960s and 1970s, comprehensive reconnaissance and feasibility studies were carried out on the Abbai (Blue Nile), Awash and Wabe Shebelle river basins. In 1962, a German engineering team, and in 1964, the U.S. Bureau of Reclamation undertook extensive studies of the water resource potential of the Abbai River basin, the largest basin in the country. Both reports maintained that there were high hopes for the development of irrigated agriculture in the basin. The German study (Lahmeyer 1962), which was confined to the Gilgel Abbai basin, a much smaller area, suggested that the production of oil seeds, pulses and fodder crops, using the waters of the Gilgel Abbai, would be very profitable and earn high foreign exchange. The U.S. study recommended that small-scale irrigation should be greatly encouraged but that large-scale schemes would be too costly. It argued that without a co-ordinated water development program in the basin there would be no prospects for agricultural development in north-west Ethiopia. On the other hand, the Awash River basin attracted a good deal of local and international investment, and was the subject of numerous studies and surveys in the 1960s and 1970s (Dessalegn 1986). By the beginning of the 1970s, 100,000 ha. of land was under modern irrigation in the country of which about 50 percent was located in the Awash Valley (Wetterhal 1972). An extensive survey of the Wabe Shebelle basin, which was began at the end of the 1960s, was completed in 1972. About the same time, a reconnaissance survey of the Tekezze and Mereb and Gash Rivers in the north of the country was under way. In brief, the imperial regime was keen to determine the water resource potential of the country's river basins and to invite foreign capital to invest in agro-industrial enterprises in these areas.

In the late 1980s, an Indian firm, WAPCOs, prepared a preliminary master plan for water development for the whole country (WAPCOS 1990).  At present, water resource master plans have been completed for the Omo-Gibe and Baro-Akobbo basins, while plans for a similar undertaking are afoot for the Abbai and Tekezze river basins. A hydropower project is under construction on the Gilgel Gibe River. For the Wabi Shebelle basin, preparation of a master plan has been initiated, and the work is scheduled to be completed by the year 2000. Plans for a surface water study of the Awash basin, a survey of the Rift Valley, and a preliminary capacity assessment of the Genale basin are also in the pipe line, with completion targets set for 2000 (MWR 1996)^[2]. On a smaller scale, pre-feasibility and reconnaissance studies of watersheds and subsidiary river valleys have been undertaken at the initiative of WRDA and EVSDA in the 1980s. These include the Birr and Koga watersheds, Gilgel Abbai, and the Borkena catchment. The main objective of all these ventures has been to determine the water potential of the country, assess the extent and nature of water utilisation, and recommend priority areas for the development of water resources.