Policy reforms to improve the economic efficiency and environmental effectiveness of the current policy mix to lower agricultural pressure on water systems are important steps toward the sustainable management of water quality in agriculture. Where there are policy and market failures to address water pollution in agriculture, it can also help to seek and introduce innovative policy tools and market approaches to overcome these failures. A strategy toward the sustainable management of water quality in agriculture, that seeks to lower budgetary expenditure of abatement programmes and reduces the external costs of agricultural pollution, while building on recent policy reforms in OECD countries should consider the following: enforce compliance with existing water quality regulations and standards; remove perverse support in agriculture to lower pressure on water systems; take into account the Polluter-Pays-Principle to reduce agricultural water pollution; set realistic water quality targets and standards for agriculture; improve the spatial targeting of policies to areas where water pollution is most acute; assess the cost effectiveness of different policy options to address water quality in agriculture; take a holistic approach to agricultural pollution policies; and establish information systems to support farmers, water managers and policy makers.