Preparation of small catchment areas on rainfed valley floor soils in highland Balochistan, Pakistan, is a low-cost method of generating run-off and increasing crop yields within the cropped areas. The effect of different proportions of water catchment area to cropped area were investigated by comparing a control treatment with the entire area planted to the crop (traditional rainfed agriculture); a 1:1 treatment, with one half of the area used for water catchment and one half for planting; and a 2:1 treatment, with two thirds of the area used for water catchment and one third for planting. Results from six seasons of trials using wheat (Triticum aestivum) showed that the 1:1 treatment had 23% higher net benefits than the control, with a 19% reduction in the coefficient of variation. The 2:1 treatment had 29% lower net benefits than the control and reduced the variation in net benefits by 8%. By contrast, four seasons of trials using barley (Hordeum vulgare) showed that the l: l treatment yielded 25% lower net benefits than the control but increased by 4% the variation in net benefits. Treatment 2:1 had 36% lower net benefits than the control and 18% more variation. Even though the gross revenue from wheat under the 1:1 treatment was less than that from the control, the reduction in total costs in the 1:1 treatment resulted in larger net benefits than the control. Water-harvesting in the valley floors is not a net yield-increasing technology. Land suitable for cultivation is limited and the increases in yields in the cropped area resulting from water-harvesting are offset by the opportunity costs of the catchment area. However, wheat grown in a 1:1 ratio of cropped to catchment area can increase farmers' income and decrease its variation. For barley, farmers are better off using their traditional management practice than giving up part of their cropped area to create water catchments.