An integrated watershed management framework that combines detailed spatial biophysical attributes of land with a hydrologic model and an economic model is developed to study the cost-effective enrollment of land in the Conservation Reserve Enhancement Program (CREP). Compared with previous related studies that assumed exogenous sediment deposition coefficients related only to site specific characteristics, this research explicitly considers endogenous sediment deposition coefficients, that are determined by landuse decisions made by all land parcels in the run-off path, in determining land rental offers. The modeling framework is applied to one of the eligible watersheds, Court Creek, in Illinois. We find that the optimal targeting of land enrollment is much more cost-effective than a uniform land rental policy.