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The challenge of producing food for a rapidly increasing population in semi-arid agro-ecosystems in Southern Africa is daunting. More food necessarily means more consumptive use of so-called green water flow (vapour flow sustaining crop growth). Every increase in food production upstream in a watershed will impact on water user and using systems downstream. Intensifying agriculture has in the past often been carried out with negative side effects in terms of land and water degradation. Water legislation is increasingly incorporating the requirement to safeguard a water reserve to sustain instream ecology. To address the challenges of increasing food production, improving rural livelihoods, while safeguarding critical ecological functions, a research programme has recently been launched on "Smallholder System Innovations in Integrated Watershed Management" (SSI). The programme takes an integrated approach to agricultural water management, analysing the interactions between the adoption and participatory adaptation of water system innovations (such as water harvesting, drip irrigation, conservation farming. etc.), increased water use in agriculture and water flows to sustain ecological functions that deliver critical ecosystem services to humans. The research is carried out in the Pangani Basin in Tanzania and the Tbukela Basin in South Africa. A nested scale approach is adopted, which will enable the analysis of scale interactions between water management at the farm level, and cascading hydrological impacts at watershed and basin scale. This paper describes the integrated research approach of the SSI programme, and indicates areas of potential to upgrade rainfed agriculture in water scarcity-prone agro-ecosystems while securing water for downstream use. (C) 2004 Published by Elsevier Ltd.