Abstract: Based on the environmental policies of the state and economic theories applicable,a systematic series of economic policies for control and management of agricultural non-point source pollution(NPSP) was designed with clear objectives,principles and methods.The key issues of the policy system include pollution charge and input taxation as deterrence,and subsidization as incentive,effluent trading for cost minimization.The watershed of Chaohe River,one of the two main water sources of the Miyun Reservoir,which is an important water source supplying drinking water to the residents in Beijing,is chosen as the demonstrative research area.Based on analysis of functions and suitability of various economic policies,a site-specific economic policy conception is advanced,putting encouragement and incentive first and penalty and fine second.Feasibility of the policy is analyzed with consideration of economy,ecology,technology and institution.It is concluded that the policy is necessary and feasible.