Two consultants were hired to assess country needs and capabilities in preparation for a proposed A.I.D. regional water management project in Central America. The result of the consultancy in Costa Rica, Nicaragua, and Panama is herein presented. After exemplifying the importance of watershed management in the region through reviews of water use and the extent of watershed degradation in the three countries, the author provides brief profiles of Costa Rican, Panamanian, and Nicaraguan government institutions involved in water use/management; principal information agencies (including the regional efforts of the Instituto Interamericano de Documentacion e Informacion Agricola); and educational and training infrastructure. Key problems, including discrepant legal bases for delegating institutional responsibilities, uncoordinated information collection, and weak or absent educational infrastructure for training, are noted. The design of a 5-year regional project, to be coordinated by Costa Rica's Centro Agronomico Tropical de Investigaciones y Ensenanza (CATIE) and aimed at strengthening the watershed management capabilities of national institutions, is proposed. An overview of CATIE's Wildlands and Watershed Management Program and guidelines for a project design document are included among the appendices.