NPC manages eleven watershed areas with a total land area of 485,199 hectares through its Watershed Management Department. These watersheds, which support power generation, domestic water supply and irrigation, are managed through rehabilitation, protection and resources development.

Rehabilitation programs like reforestation and agroforestry sustain propagation of high value and good quality seedlings of indigenous and fruit-bearing trees, and re-vegetation of open areas.

NPC likewise performs watershed protection through rigorous foot patrolling and law enforcement in partnership with the Philippine Army, Philippine National Police, Philippine Coast Guard, local government units and stakeholders. The corporation also conducts information and education campaigns and livelihood trainings to teach people the importance of a sustainable environment and to encourage them to venture into alternative income-generating activities. 

These programs are funded through the Universal Charge-Environmental Charge as approved by the Energy Regulatory Commission.