Buedulumchhu-Balaychhu-Zharingaychhu critical watershed under Dagana Dzongkhag has the highest human population density. The watershed areas are highly disturbed and degraded due to high human population, consequently exerting pressure to natural resources and agriculture land. The problem was further aggravated due to climate change, resulting in erratic timing and quantity of rainfall, directly affecting the livelihood of farmers. To mitigate the effects of land degradation, climate change and to improve livelihood, there is immediate need for action to improve the watershed conditions and services. The study was carried out to identify important land use types and water related problems in three Geogs of Dagana Dzongkhag, for the purpose of land use planning. This would help to achieve sustainable management of natural resources, and maintenance and improvement of watershed services. A participatory approach was used for land use planning. Participatory rural appraisal (PRA) methods like matrix, pair wise ranking, village timeline, resource mapping using 3-D model, semi-structured interviews and transect walks, were used for collecting data and to encourage effective participation of farmers in participatory land use planning processes. The use of selected PRA methods efficiently generated the required information on land use types, land use problems and interventions, and facilitated the implementation planning. This information is important for land use planning for the Dagana degraded watershed. The effectiveness and applicability of selected PRA methods were evaluated by assessing the participation of individual participants. The use of PRA methods encouraged effective participation of farmers and facilitated learning. Keywords: Climate change, land degradation, watershed, land use, critical watershed, participation, PRA methods, livelihood, farmers, participation.