About 20 years ago, it was a popular belief that the goals of economic development and environmental protection were mutually exclusive. Today, it is believed that a better understanding between development and the environment is needed. Contamination of surface and groundwater sources by fertilizer and pesticides has been well documented in the United States. Agriculture is viewed as a significant nonpoint source of groundwater contamination, which presents a difficult problem for the design of governmental methodologies to prevent pollution. About six years ago, the federal government launched an initiative to protect water sources without jeopardizing the economic vitality of U.S. agriculture. The hypothesis was that farmers must change production practices to reduce or avoid contamination of surface and groundwater sources. The present paper summarizes the results of several field-scale studies conducted at Iowa State University to reduce contamination of surface and groundwater sources by developing better tillage and chemical management systems. Results indicate that chemical management practices, such as multiple nitrogen applications at appropriate timing and banding of pesticides, in conjunction with conservation tillage systems can definitely reduce the potential for contamination of water resources. Application of these findings across the nation would save millions of dollars on chemical use, while maintaining the quality of water resources at acceptable levels.