Potato production and processing are very important activities in the agricultural economy of the Pacific Northwest. Part of the reason for the development of this industry has been the availability of water for both growing and processing. A great amount of water is used in processing potato products, such as frozen French fries, and the waste water is a pollutant because it contains high levels of nitrate and other nutrients. Using this waste water to irrigate the fields can be a suitable disposal method. Field application will reduce potato fertilizer costs, but it can also cause underground water contamination if over-applied to the field. In this econometric study, we used field data associated with current waste water applications in central Washington to examine the yield response as well as the soil nitrogen content response to waste water applications. Our results from the production model show that both water and nitrogen positively affect crop yields at the current levels of application, but potassium has been over applied. This implies that replacing some waste water with fresh water and nitrogen fertilizer will increase production. The environmental model results show that applying more nitrogen to the soil leads to more movement below the root zone. The results also suggest that higher crop yields lead to less nitrogen in the soil, and applying more water increases crop yields, which can reduce the nitrogen left in the soil. Therefore, relative to the current practice, waste water application rates should be reduced and supplemented with fresh water to enhance nitrogen use by plants and reduce residual nitrogen in the soil.