• Watershed management basically refers to efficient management and conservation of surface and groundwater resources.
•  It involves prevention of runoff and storage and recharge of groundwater through various methods like percolation tanks, recharge wells, etc.
• Watershed management includes conservation, regeneration and judicious use of all resources – natural (like land, water, plants and animals) and human with in a watershed. 
• Watershed management aims at bringing about balance between natural resources on the one hand and society on the other. 
• The success of watershed development largely depends upon community participation.

So, the correct option is option 3.