390Natural resources and environmental quality are increasingly important aspects of the US economy. This is particularly true in the agricultural industry, which is heavily dependent on land, agrochemicals, and water. This chapter explores how rational actors can overuse, or exploit, resources such as cropland, water from an underground aquifer, or grazing land. Externalities such as air and water pollution from agricultural production and processing can result in suboptimal or harmful outcomes for society. Possible solutions to externality problems include bans, taxes, quantitative standards, and subsidies. Under certain circumstances, private bargaining can also lead to efficient environmental outcomes.