Taking the Suijiawopu small watershed as an example, this paper briefly analyses the status, characteristics, and causes of the degraded ecosystem,and then, according to the principles of eco economics, puts forward the principles,orientation,ways and measures of the degraded ecosystem reconstruction and agricultural resources exploitation.Obvious ecological benefits and economic benefits have been achieved in eco economic valleys, protective forest system,artificial grassland, drought resistant farmland and culture demonstration area for high yield through 5 years' practice.