The study area is northern part of the Central Main Ethiopian rift valley bounded in west andrnnorth by Awash basin; and in east by Wabi shebele catchment. Meki and Katar are the mainrnrivers draining western and eastern part of the catchment respectively and both feed LakernZiway before outflow to Bulbula River in south west. The area has mean annual precipitation,rnpotential evapotranspiration and actual evapotranspiration of 887mm, 1284mm and 856mmrnrespectively.rnDirect groundwater recharge of the catchment was estimated using empirical formula, soilrnmoisture budgeting and groundwater balance methods. The empirical formula gives 67mm;rnwhile the results of soil moisture balance and groundwater balance are 57mm and 83mmrnrespectively.rnGroundwater and surface water interaction in the area have been analyzed using groundwaterrntable contour, field base river discharge measurements, channel water balance andrnhydrographic analysis. The analysis result shows that Meki River in volcano-lacustrine depositrnof rift floor and Katar River in Upper and Central Wonji Fault Belt are loosing reaches. In thernrest of the catchment areas, the rivers and streams are gaining reaches.rnAnnual and monthly lake water balances have been conducted by incorporating available andrnnecessary parameters. In annual basis groundwater outflow is greater than groundwater inflow.rnThe recession in groundwater inflow over outflow is higher in the months of July and Augustrndue to time lag between commencement of surface moisture and contribution of groundwaterrnto the lake on one hand and the increase in groundwater outflow due to rising lake level on thernother hand.rnAssessment of recent changes in hydrologic environment has been analyzed by trends in shortrnand long term precipitation, evaporation, abstraction, rivers discharge, lake level and directrngroundwater recharge. All these parameters reveal changes of hydrologic environment;rnattributed both to climate change and human interference