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This paper presents an agroeconomic approach to assess the economic impact of improving nitrogen and irrigation management practices in California’s Tulare Lake Basin and the Salinas Valley. The approach employs a self-calibrated mathematical programming model with a constant elasticity of substitution production function and two nests: one for irrigation and one for nitrogen. Agricultural crop yields are maintained as a worst-case for improving nitrogen use efficiency. Small reductions () in nitrate load to groundwater can be achieved at relatively low costs. Load reductions of 50% may require more costly nitrogen management practices and a broader education strategy with higher reductions in farm net revenues and irrigated area. Other policy instruments such as a tax and levees on applied nitrogen may help reduce groundwater load and raise revenues for alternate drinking water supplies in …