The future of agricultural policy in the United States is complicated by the emerging potential for large-scale bioenergy production. The growing demand for cleaner burning fuels and diversified energy sources is likely to generate changes in agricultural cropping patterns and land management practices, placing additional pressure on a natural resource base that is already struggling to accommodate the extent and intensiveness of agricultural production. This research uses a national agro-environmental production model to examine the increasingly complex relationship between agricultural and energy policy and our nation’s soil and water health. In order to inform the debate about the implications of expanding biofuels production, World Resources Institute (WRI) is examining the environmental costs and benefits of biofuel technology and the impact that large-scale renewable bio-energy production could have on agricultural structure, markets for commodities, and, ultimately, on water, soil, and atmospheric condition. The study examines anticipated technologies for cellulosic ethanol created from a variety of feedstocks including corn stover and switchgrass, as well as current technology for the production of grain-based ethanol and soy-based biodiesel. Our economic analysis also allows us to explore how national commodity markets and farm income will be impacted by the changes in pattern and extent of agricultural production that are likely to accompany large-scale production of the various feedstocks. We will then explore the interaction between these impacts and policy to identify how agricultural or energy policy can be used to mitigate the potential environmental impacts associated with a growing agricultural role in the production of our nation’s energy supply.