Modern farm production practices, which use agricultural chemicals, benefit consumers through lower prices and increased output. Consequences of agricultural production, however, such as soil erosion, chemical run off and leaching, and wetlands conversion, may impair surface and ground water quality. These off-farm water-quality effects impose costs on society, including damage to fish and wildlife resources, costs of avoiding potential health hazards and preserving natural environments, and lost recreational opportunities. This report summarizes conflicts between agricultural production and water quality and discusses policies that stress the use of economic and technical assistance incentives to encourage adoption of pollution-reducing farming practices.