A group incentive program to encourage farmer adoption of best management practices is simulated for a typical watershed in central Illinois. The incentive payments, program costs and environmental impacts of the program are simulated. The results show that the best management practices may not actually reduce farm profits but may increase farm profits and reduce environmental pollution. The sponsor in most cases may not have to pay anything under the incentive contract. This may bring about a win-win situation for the sponsor, the farmer participating in the program, and society as a whole. The program could be implemented as an educational effort to demonstrate the benefits of sound management practices.