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This paper reports on the integration of a farm decision model with a watershed biophysical model to evaluate the economic and environmental impacts of farming decisions in an agricultural watershed. A baseline, one uncoordinated and four watershed‐level coordinated decision scenarios were evaluated and compared as alternative ways of managing the significant tradeoffs expected when multiple conflict management objectives exist. The four coordinated scenarios outperform the uncoordinated one in terms of economic returns and key environmental impacts. The study's findings contribute to the understanding of biophysical and economic processes in agricultural watersheds.