[1] The depletion of water storage worldwide as a consequence of reservoir sedimentation is a growing problem. Effective sediment management is needed to enhance dam productivity and to extend storage life, thereby avoiding various economic and environmental losses. This paper analyzes reservoir level sediment management from a benefit-cost perspective and suggests desirable management strategies. Dynamic programming simulation has been used to analyze the long-term consequences of dam management decisions regarding reservoir sedimentation. The results indicate that doing nothing is likely to lead to inefficiencies and reduce the social welfare in the long run. Alternatively, introducing reservoir level sediment management can mitigate the economic loss due to reservoir sedimentation. Technical innovations that improve sediment removal capabilities and their cost would be vital for conserving the reservoir water storage.