A watershed-based modeling system is developed to assess alternative nutrient abatement policies, including fertilizer taxes, application caps, and uniform reductions. A microeconometric model of nutrient use is estimated using farm-level data, prices, and spatially detailed soil and land characteristics. Results are interfaced with a physical watershed model to predict water quality changes. Simulations demonstrate differences in water quality effects across policies. For nitrate loads at the watershed outlet, an application cap provides slightly superior performance for small reductions, but a tax is more efficient under larger reductions. Phosphorus reductions at the subwatershed level vary but provide information about policy tradeoffs.