Generally the government has to supervise the development and use of watershed in order to preclude externalities caused by individual users. But in fact the government is not an organization with only one objective. The power of governance has been divided to different branches of government in different areas and each has its own objectives. Due to the externalities in the process of wielding power in watershed management, conflicts may exist between different branches of government, which results in inefficiency of state interference. Some suggestions are proposed to solve these problems at the end of the paper.