This document reports on an RRA conducted in the Upper Mille and Cheleka catchments development project in Wollo province, Ethiopia. Its goals were (i) to test the applicability of RRA to the work of the Ethiopian Red Cross Society, and (ii) to analyse two peasant associations and suggest possible innovations to benefit their members. This introduction outlines a form of RRA known as agroecosystem analysis (AEA). Its methods and procedure of implementation are described: sub-groups examined diversification in space through mapping, transects, and analysing home gardens, and diversification in time through seasonal calendars. A second section examines the importance of diversification for security, improvement of production and purchasing power, and to act as a catalyst for overall development. The results of the RRA's in two peasant associations comprise the bulk of the report. For each, key issues are identified (e.g. land use, water resources, livestock, crops, health, forest resources), and strategies for diversification are examined (e.g. irrigation, land use patterns, revegetation, experimenting with new crops, clean water supply, development of home gardens, reforestation, credit etc.). The report ends with comments on the use of RRA in development planning and the role of RRA in developing management concepts and process in peasant associations.