More and more communities are adopting a watershed approach to solving their water quality and other natural resource problems. By considering the inputs from all pollution sources and activities within a hydrologically defined drainage system, managers can understand their watershed on a more holistic level and determine needs for restoring and maintaining the watershed's chemical, physical, and biological integrity. Watershed approaches also consider social and economic factors. Therefore, local communities that use watershed approaches are able to incorporate these concerns into future decision-making about environmental issues. The experience of the last decade demonstrates that this approach to ecosystem management reveals problems and opportunities our traditional approaches did not reveal. By combining forces - and resources - watershed teams are now better equipped to address their watershed problems. Watershed organizations know the types of projects most needed in their area, but they are often unable to implement such projects because of a lack of financial and technical support. With constrained federal discretionary spending, federal programs are rarely the primary source of funding. They can, however, be one source among many that, taken together, can result in real environmental progress. In 1997 we published the first edition of the Catalog of Federal Funding Sources for Watershed Protection to help organizations locate federal support. The overwhelmingly positive response we received to the document has prompted us to update the Catalog in 1999. The second edition of the document highlights federal grants and loans that may be used at the local level to support watershed projects, and it contains references to many other good publications and Web sites on funding and technical assistance.