To fulfill the national bioenergy goals of the United States, conversion of marginal lands to intensive biomass crop production and/or application of greater amounts of nutrients to existing cropland could be expected. Such change in agricultural practices could produce unintended environmental consequences such as water quality degradation. Select Best Management Practices (BMPs) are evaluated for water quality mitigation effectiveness as well as for their relative cost-effectiveness, issues that are often ignored in evaluation of biofuels as a sustainable solution for energy demand. The water quality impacts of converting pastureland to intensive biomass production for biofuel, evaluated using the Soil Water Assessment Tool (SWAT), indicate significant increases in erosion and nutrient loadings to water bodies. Hydrologic and economic evaluation of the BMPs indicate their implementation produced effective water pollution mitigation but at substantial costs, accentuating the sustainability issue related to the economics of renewable fuels. U.S. national energy policy designed around achieving energy independence should also consider environmental and economic trade-offs for biofuels to be an economically and environmentally sustainable alternative to fossil fuels.