You'll notice I've added a hill in one corner by layering up scraps of Styrofoam. The next step is the worst - carving everything. Carving out the riverbed, shaping the hill, etc. This is messy because the Styrofoam gets all over the place but my method is to carve a little, vacuum a lot, then repeat. I used an old ginsu knife and another cheapie knife to do the carving.
The riverbed sides and hill were covered with lightweight joint compound. I've never used this for making scenery before but in spots where it was applied rather thickly cracks developed. Joint compound is meant to be applied on walls in very thin layers but this is no real biggie as the cracks will be filled in with more compound. This stuff doesn't cover the Styrofoam as well as plaster nor have the same workability but it also doesn't dry rock hard like plaster, a major bonus when trying to 'plant' trees or make changes in your diorama.
Tried my hand at a bomb crater
Everything looks kind of rough right now
A rough spot of Styrofoam is left in the riverbed where the glue stuck really well. This isn't a drawback but rather something that can be used as a scenic element. It was covered with a thin coat of joint compound.