This study was carried out in Bilate River sub-basin to assess the surface water potential andrndemands. A DEM, LULC and soil data, slope, and climatic data were used to describe thernhydrology of study area. The annual activity level, annual water use rate and the supply data usedrnto estimate the current and the future water demands. ArcSWAT and WEAP models were used tornevaluate the surface water potential and demands. The Bilate River Sub-Basin receives anrnestimated mean annual precipitation of 1106.2mm. The estimated mean annual runoff in the wholernwatershed is 851.5MCM which correspond to 162.3mm (14.7%) mean annual depth of surfacernrunoff is equivalent to 14.7% of mean annual precipitation. The mean annual water balance showsrnthat the significant number of the mean annual precipitation (69.4%) received by the watershedrnwere lost via evapotranspiration. The remaining parts of annual precipitation (172.2mm whichrnaccounts about 15.9%) received by the watershed infiltrates to the soil to recharge GW aquifersrnas well as to contribute to baseflow (24.2mm as lateral flow and about 140.35mm as return flow).rnThe model was calibrated and validated by using 14 years streamflow data. The performance wasrnfound good during calibration [correlation coefficient (Rrn2rn = 0.75), Nash-Sutcliffe efficiency (NSE)rn= 0.62), PBIAS =18.8] and validation (Rrn=0.78, NSE = 0.61, and PBIAS = 23). The water demandrnpart of this study was considers environmental flow requirements, domestic, agricultural, andrnlivestock by generating different scenarios based on a different set of assumptions in the sub-basinrnup to 2035. The study found that the watershed is highly sensitive to the Increasing water demandrnscenario and Irrigation command area projection, suggesting that the slight changes will changernthe current and future water demands. The estimated surface water potential was 851.5MCM inrnthe sub-basin and the current utilization of these potential was about 322MCM for consumptivernuse and non-consumptive (EFR). The scenarios were developed to evaluate the future demandsrnbased on different sets of â€œwhat ifâ€ situations up to the 2035. Therefore, the estimated that totalrnannual consumptive water demand may be expected to be 235.2MCM, 298.4MCM, 447.6MCMrnand 541.5MCM for the reference scenario, high population growth, projected irrigation area andrnincreased water demand scenarios and 170.3MCM for environmental flow requirement. Hence,rnthis study consider the environmental flow requirement of 20% of the mean annual flow volume tornmaintain the basic ecological functioning and water balance in Lake Abaya.