Dig a hole at each end where you're placing the waterfall and stream bed for the ponds. The pump will be placed inside a plastic basin in the bottom pond. Dig the bottom pond so that it's 2 feet wider and 6 inches deeper than the basin that you're using.
Draw lines onto the sides of the basin to divide it into thirds.
Drill holes into the sides of the basin to allow water to flow through. Space the holes 4 inches apart, with different-sized holes in each section of the basin. Drill 3/8-inch holes in the top third of the basin, 1-inch holes in the center section and 2-inch holes in the bottom section.
Place landscaping fabric over the soil inside both holes, and rubber liner on top of it. The landscaping fabric stabilizes the soil, and the rubber liner protects it from the rocks you'll place inside the holes.
Lay the basin into the bottom pond, centering it.
Place the pump into the center of the basin and attach the water line to it.
Pull the excess water line out of the ground, then fill the gap between the basin and the sides of the pond with crushed gravel.
Run the water line up to the top pond, placing the end inside the pond. When the waterfall is completed, the pump in the bottom pond will pump water through the water line and into the upper pond, where it will flow down the stream bed and over the waterfall.