Colorado has institutionalized an innovative method for managing reservoir water quality which allows for point/nonpoint source phosphorus trading and for point sources to obtain phosphorus “credit” for controlling nonpoint source phosphorus. The State Water Quality Control Commission and the Environmental Protection Agency have approved this method for use at Dillon Reservoir, a high-altitude water body located in the heart of ski country, serving as a summer recreational resource and primary drinking water supply for the Denver metro area; and Cherry Creek, a plains reservoir which is the most intensely used water body for recreation in Colorado. Both reservoirs are threatened by eutrophication from increased point and nonpoint source nutrients loadings resulting from future growth. This approach has built-in economic and regulatory incentives for application of conscientious nonpoint source control. Dillon Reservoir is the first water body in the country for which this approach has been officially adopted.