Abstract:Uruguay has encouraged the development of the forestry sector since 1989. As a member of the Montreal Process, the country has followed a set of criteria and indicators for the Sustainable Forest Management. The aim of this paper is to describe the studies carried out in a large basin of 2097 km 2 , located in an area of humid subtropical climate and 1300 mm of long-term mean annual rainfall, where the conversion of natural grasslands to forests increased up to 540 km 2 during the last 15 years. Using data from daily rainfall and streamflow, the study analyses the effects of afforestation on the runoff and water loss. The analysis comprises hydrographs resulting from comparable rainfall events and annual and seasonal streamflow and water loss behaviour, both before afforestation (1975)(1976)(1977)(1978)(1979)(1980)(1981)(1982)(1983)(1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993) and during the afforestation period (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008). A statistically significant reduction of runoff volumes (33-43%) and peak flows (59-65%) were identified on storm hydrographs. The annual and seasonal streamflow also showed diminishing tendencies due to the forestry development, whereas the water loss increases. The annual streamflow decreased between 8Ð2 and 36Ð5% depending on the annual rainfall totals. The streamflow reduction was higher during spring and summer (25Ð2-38Ð4%) and smaller during autumn and winter (15-20Ð3%). The water loss is expected to increase by 98 mm for the long-term mean annual rainfall. The resulting information is a valuable input for the Integrated Water Resources Management of the Negro river basin located downstream, where hydroelectric power, rice irrigation and forestry development are supported.