One of the critical aspects which has been emphasized at UNCED conference is utilization of coastal areas and its issues. Considering the afore-mentioned critical problems, the coasts of the Caspian Sea are of particular importance. The Caspian Sea is located between five countries: Iran, Turkmenistan, Azerbaijan, Russia and Kazakhstan. The area, with high and specific ecological capabilities, is very suitable to urban development. There is no doubt that development and industrialization might provide socio-economic welfare to the area-dependent inhabitants, but socio-environmental issues could be generated by improper application of technology and industry. As hurried development, without carrying-out environmental impact assessment in watersheds of the Caspian Sea, might impose adverse effects on the environmental quality of the water body, the present study intends to execute Land Degradation Model (LDM) and determination of ecological susceptibility of terrestrial ecosystems using the Object-Oriented Method in sub-watersheds of the water body. Since long-term environmental issues could not immediately be solved by technological approaches, understanding the relationship between development and environmental protection and consideration of environmental impact assessment (EIA) as an important planning tool in planning process, are being focused in order to achieve sustainable development.