While non-point pollution from agriculture has become an increasingly serious problem in China, some progress has been made in studying the causal biophysical processes. However, few studies have assessed the economic consequences of non-point pollution in China or the policy options that could be employed to combat it. In this work a sustainable strategy to control non-point pollution from crop production, which involved taxing excessive inputs of irrigation water and fertilizer, was proposed. The approach taken to assess these measures combined biophysical and economic models,having a trade-off between economic returns and an improved environment. A proven and practical spatially referenced water and nutrient management model was used to determine the quantities of excessive irrigation water and fertilizer for specific soil and land use. Also, a set of indicators were proposed for evaluating the effects of agricultural economic output and agricultural practices on the environment.