**4. Conclusion**

Dry matter production was higher for combination of urea and NPS followed by urea than control one. Higher grasses species composition between application of combination of urea and NPS than urea alone. Higher net revenue was obtained in nitrogen alone than combined application of nitrogen and phosphorus fertilizers. Therefore, better marginal rate of return (MRR = 828%) recorded in Urea application for pastureland improvement in Gamo Gofa highland areas. Applying nitrogen to pasture land improves dry matter yield in 34% comparing to not applying. A farmer can have net revenue of more than 191.04 USD per hectare on average per season and it is economical to apply nitrogen for pasture land improvement. It is recommended to apply 150 kg/ha urea fertilizer to fetch optimum economical yield of pasture land in southern Ethiopia highlands.
