Prince Edward Island (PEI) is well known around the world for its potato industry. While economically beneficial for PEI, potato production contributes to its environmental deterioration. This can be attributed to the high use of chemicals and fertilizers in the production, which leads to the pollution of PEI’s watercourses. In response to the environmental crisis, the PEI provincial government proposed several land use policies to mitigate the negative influence of potato production on water quality. One of the policies that is analyzed in this paper is a mandated crop rotation. The analysis of the mandatory crop rotation policy is achieved through the application of optimal control theory and dynamic programming. Findings from the co-integration model show that agriculture is most likely responsible for watercourse pollution in PEI. This provides statistical evidence that a policy aimed at water protection, specifically targeting potato land use is necessary. However the application of environmentally friendly approach (mandatory crops rotation) is positive, its negative impact on individual farms economy is evident.