This research investigates the validity of efforts to protect groundwater quality for a variety of beneficial uses by using a widely accepted nitrate-accounting procedure as the mechanism to obtain reductions in farmer-applied nitrogen fertilizers. A dynamic model of nitrogen fertilizer use, incorporating critical elements of the nutrient cycle, is employed to demonstrate that recommended nitrogen fertilizer application rates based on this nitrate-accounting procedure underestimate nitrogen fertilizer use. These results occur because the nitrate-accounting procedure inadequately represents farmer responses to nitrates available from irrigation water. An optimal tax rate on nitrogen fertilizer use is derived which, if implemented, would lead to the reduced levels of nitrogen fertilizer use intended by the nitrate accounting procedure. ¿ American Geophysical Union 1996