Soil degradation is a serious problem in the central and northern Highlands of Ethiopia. It has been so for several decades as a result of over exploitation and mismanagement. Relocation of a portion of the population from these regions to the relatively less populated Southwestern Highlands has taken place for decades to try to address the problem. However, such mass resettlements have caused severe soil degradation problems in many destination areas in the Southwestern Highlands. The aim of this study was to assess the problem of soil degradation using the caesium-137 isotope and to test its value for erosion study in the region. The adapted USLE was applied to compare results from the caesium-137 isotope studies. Along a deforestation continuum, fields cultivated for various years were studied for erosion. From a reference grazing land plot, total caesium-137 fallout of 2026 ± 176 Bq m−2 with a CV of 24·6 per cent was recorded showing the presence of sufficient fallout to apply the technique. Erosion in cultivated fields was estimated against this reference using conversion models. Results from the Proportional Model |−13·9 ± 2·7|and the adapted USLE |12·3 ± 2·6| were not significantly different (p < 0·05), meaning the technique provides reliable results. A positive relationship was observed between severity of erosion and time of cultivation after forest clearing (R2 = 0·78). The mean annual loss of soil from cultivated land, 14·9 ± 2·9 t ha−1 y−1, is already beyond the tolerable threshold and might exacerbate further clearing of forests for cultivation if the land is not properly managed. Copyright © 2011 John Wiley & Sons, Ltd.