Erosion and soil degradation are environmental impacts recognized worldwide. The degraded areas in the Guarapuava region are small (patchy). However, these areas are important sources of sediment that affects water quality in rural catchments and could threaten farm sustainability because farmers in this region generally have only a small area for cultivation. This paper presents a case study at a field scale that explores key questions concerning the evaluation of soil erosion, the appraisal of soil degradation and area recovery. This study was carried out over seven years (2002–2008). Several different measurement procedures were employed including assessment of soil loss, aggregation distribution, bulk density, total porosity, aggregate water retention and palisade efficiency. The degraded area displayed a very high soil loss (165.2–217.7 t ha−1 y−1). The palisades were efficient for sediment retention because they were able to trap 62–88 per cent of the total sediment that originated in the area during the first year when this management technique was applied. After their installation, the retained sediment was gradually enhanced with respect to its physical, chemical and biological characteristics. The palisades promoted efficient soil recuperation in spite of the degraded conditions of the degraded area (shallow rills and cohesive soil). The use of palisades together with enclosure of the area was the most efficient method for promoting soil recovery and plant succession. These techniques allowed transformation of the area from a loss system towards an accumulation system with respect to sediment, water, nutrients, organic matter and seeds. Copyright © 2010 John Wiley & Sons, Ltd.