Lake Tana sub-basin is known to have significant water resources potential and natural assets. In light of this fact, there are a number of water development schemes in the region on the hydropower and irrigation sectors. ARBIMPP outlines more than 121,000 ha net irrigation area for Lake Tana sub-basin (BCEOM, 1998). However, currently there are only two hydropower plants operational, with total generating capacity of 84MW. Though the hydropower sector is the sole water user, the water level of Lake Tana fell to a historic low level in June 2003. This had an effect on both the lake’s ecology and the navigation sector. In this study a scenario based analysis of the water development schemes was conducted using WEAP. Scenarios were based on 44 year time series of flow, rainfall and evaporation, 1960-2004. Each scenario was undertaken to determine the likely effects of a different degree of future water resource development on the water levels of Lake Tana and hence the implications for the lake ecosystem. Furthermore, the potential of the sub-basin’s water resources for the proposed projects were assessed. The simulation results revealed that the water levels of the lake were lowered in all the scenarios when compared to the ‘virgin’ situation since water abstraction increases for the projects. Nevertheless, the drawdowns were severe only during dry years. For example, for the future development scenario with the cropping pattern in the irrigation schemes dominated by rice, the average lake level was reduced by about 1.2 meters from the observed levels during the period 1980-1988. This indicates a reduction in the littoral zone, which is biologically rich area of the lake, by about 23%. For each scenario analysis of the model outputs was undertaken to determine the extent of “unmet demands” in both the hydropower and irrigation sectors. Frequency analysis of lake water-levels was also undertaken to determine the likely impact on shipping on the lake. For each scenario the water resource implications of maintaining environmental flows downstream to the Tis Issat Falls, including the impact on lake water-levels was determined. In general, the simulation results indicate the need, in future, to carefully assess trade-offs among the sub-basins water resource users. Key words: Lake Tana sub-basin, lake level, water resources development and water demand sectors.