Eutrophication has many known consequences, but there are few data on the environmental and health costs. We developed a new framework of cost categories that assess both social and ecological damage costs and policy response costs. These findings indicate the severe effects of nutrient enrichment and eutrophication on many sectors of the economy. We estimate the damage costs of freshwater eutrophication in England and Wales to be $105-160 million yr(-1) (pound 75.0-114.3 m). The policy response costs are a measure of how much is being spent to address this damage, and these amount to $77 million yr(-1) pound 54.8 m). The damage costs are dominated by seven items each with costs of $15 million yr(-1) or more: reduced value of waterfront dwellings, drinking water treatment costs for nitrogen removal, reduced recreational and amenity value of water bodies, drinking water treatment costs for removal of algal toxins and decomposition products, reduced value of nonpolluted atmosphere, negative ecological effects on biota, and net economic losses from the tourist industry. In common with other environmental problems, it would represent net value (or cost reduction) if damage was prevented at source. A variety of effective economic, regulatory, and administrative policy instruments are available for internalizing these costs.