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Terraces have been proven to be an effective conservation practice for controlling high soil loss. In large hydrological programs such as Soil and Water Assessment Tool (SWAT), terrace effects are simulated by adjusting the slope length and the USLE P-factor. In this study, a computer program based on the SCS curve number method, MUSLE and the Kodatie model, was developed to simulate each segment of the terraced slope and estimate water storage on the terrace. A previously published 4-month long dataset with 10 runoff events collected on a natural rainfall runoff plot in southwest China in 2008 was used for verification. Preliminary results showed that the program simulated runoff and sediment on terraced and control plots with average errors ranging from 8 to 37%. The program simulated the terrace effectiveness, i.e. the difference in runoff and sediment yield between the terraced and control plots, with less than 10% error. This program can be incorporated into the SWAT model for process-based evaluation of terrace effects at field and watershed scales. Its physical basis provides a useful alternative to the use of the P-factor to characterize the effectiveness of terraces.