The study area, the Kulfo River basin, is located 500 km south of Addis Ababa. It is bounded on the basis of the surface divide of the Kulfo River. The area is composed of part of the rift floor and part of the western escarpment. More than 85% of the area is underlain by Oligocene basalt and the lowland areas by alluvium and Quaternary basalt. Using thrE;!e meteorological stations, the weighted mean annual rainfall of 1232 mm was computed by using the Thiessen Polygon method. The Thornthwaite method was applied to calculate the potential and actual evapotranspiration of the area, which are 971 mm and 940 mm, respectively. From the above data, the surplus water was obtained, which is 291 mm. The mean annual runoff depth of the Kulfo river is 361 mm which is less than the calculated surplus water. The reason might be that there is an inflow of groundwater from an adjacent basin. Concerning the aquifer characterstics of the different rock units, the alluvium is more productive than the other rock units. One representative well from AWn was taken to calcualte the hydraulic parameters of this unit. Using the discharge data from Arbaminch Springs, the general hydrological conditions of the springs were computed. This includes the computation of the recession constants and the recession curve for the springs. The hydraulic volume which feeds the springs instant by instant were also computed. The study of the chemistry of the springs was based on data from WSSA's Arbaminch water supply project. This study confirms that the quality of the water is suitable for drinking and agricultural purposes according to international standards. However, the presence of E. coli bacteria indicates that the water needs to be chlorinated on a regular basis.