This study evaluated the best management practices on how to manage soil losses from catchment and reduce sediment load into a dam reservoir. This study aimed to evaluate the relationship of runoff, soil loss, and sediment yield with best management practice (BMP) scenarios in the GeoWEPP environment for the selected three micro-watersheds (hot spot areas) in the Megech watershed, upper Blue Nile Basin. The impacts of four agricultural BMP scenarios, including forest five years old, corn, soybean; wheat, alfalfa (4 yr) no till; corn, soybean, wheat, alfalfa (4 yr) conservation till; and winter wheat mulch till, on soil loss, runoff, and sediment yield were quantified. The results revealed that soil loss ranges between 41.45–66.11 t/ha/year and sediment yield rates ranges between 36.5–54.8 t/ha/year with the baseline situation (conventional tillage condition) were found to be higher than the tolerable soil loss (10 t/ha/year) in the region. Implementing BMPs on the crop land of the micro-watersheds has positive impacts on all variables’ runoff, soil loss, and sediment yield reductions. Among the implemented BMPs, forests with a five-year perennial (agroforestry) option showed the highest rate of reduction for all runoff, soil loss, and sediment yield, but no cost benefit analysis was included in this study to choose among the BMPs. This study also identified that agricultural BMPs play a great role in reducing runoff, soil loss, and sediment yield in the Megech watershed to minimize on- and off-site impacts. In general, it is important to consider how cost benefit analysis will change throughout project’s implementation among the selected BMP scenarios at the watershed level in the future.