The impact of implementing different best management practices (BMPs) at the small watershed scale were examined for the Petzenkirchen catchment in Austria and Lake Vico in Italy, in terms of data needs, hydrological processes, tools and models involved. Identification of critical source areas for targeting soil and phosphorus losses turned out to be crucial for correct allocation of BMPs. Comparison of environmental effectiveness and costs, both calculated using various modelling approaches, enabled us to compare different levels of introducing BMPs ecologically and economically. Within each catchment, small areas of land tended to be the source of disproportionately large amounts of pollution . Therefore, confining mitigation to these areas costs less than targeting wider areas. This suggests that a policy for environmental programmes should be focussed on hydrological units and critical source areas within these units instead of introducing universal controls - the watering can' principle - as practised today.