This study conducts an examination of the Ilam watershed, utilizing the InVEST and SDR models to assess soil retention, erosion, and transport. It incorporates factors like rainfall erosivity, soil erodibility, DEM, land use, vegetation, and conservation practices to explore the complex interplay between ecosystem services (ES) and disservices. The study found that the average soil retention in the watershed is 94.5 tons/ha/year, the average erosion potential is 62.8 tons/ha/year, and the average sediment transport is 10.5 tons/ha/year. Forest areas retain a significant portion of sediment (60%) with low discharge (13%), while agricultural and urban regions contribute more to erosion. This highlights the importance of integrating ES into land management strategies to mitigate environmental degradation. The study highlights the crucial role of ES in maintaining ecological balance and supporting human well-being. It advocates for innovative policies and customized solutions to mitigate land use impacts on soil conservation and sediment retention, thereby fostering awareness among managers and decision-makers for more sustainable land use planning.