A major challenge for agriculture is to produce more food, feed, fuel and fibre, to meet growing global demand. Agricultural production also generates effects external to markets, both positive, conserving a wetland, and negative, such as water pollution. As there are no markets for these externalities, although they can provide a great benefit or impose a high cost on society, there is little incentive for farmers to internalise the costs of these external production effects, other than the farmer’s own motivation to do so. The key challenges for policy makers in addressing water quality issues in agriculture are to reduce farm contaminant lost into water systems while encourage agriculture to generate or conserve a range of benefits associated with water systems. Clean water is vital in securing economic benefits for agriculture and other sectors, meeting human health needs, maintaining viable ecosystems, and providing societal benefits, such as the recreational, visual amenity, and cultural values society attaches to water systems.