This dissertation focuses on the economic and environmental benefits of planting switchgrass as a bioenergy feedstock. The first chapter presents a dynamic optimization model of fertilizer and land allocation between switchgrass and corn to estimate economic benefits. Subsequent chapters utilize Geographic Information System (GIS)-based Soil and Water Assessment Tool (SWAT) to be calibrated to evaluate the environmental (nutrient and sediment loading) effects of land use conversion to switchgrass production on water quality and analyze the Water Quality Trading (WQT) program with cost-effectiveness ratios ordered for abatements of nutrient loadings in an East Tennessee watershed.