Both policy reform and environmental quality portend to be major agricultural issues in this decade. We develop a stylized general equilibrium model of the United States economy to empirically study whether success in addressing the former issue is consistent with the achievement of the latter. Policy experiments show that the level of agricultural surface water damages are indeed quite sensitive to policy reform--providing the greatest environmental benefits when land and fertilizers are highly substitutable. These results suggest that policy reform may in the long run provide an inexpensive partial answer to the environmental problem associated with agricultural production.