The problem of maintaining water quality is considered. The following assumptions are made in problem formulation: (1) the existence of a Regional Authority; (2) the use of effluent charges to provide an economic incentive for the reduction of pollution loads; and (3) the desirability of a scheme is described in terms of dissolved oxygen (DO), biochemical oxygen demanding materials (BOD), temperature, and algae concentrations. Control actions include the fractional removal of BOD at sewage treatment facilities and of energy from steam power plants via cooling towers. Multilevel approach is then utilized to permit the decomposition of the integrated problem into decentralized subproblems (essentially the polluters) and the subsequent coordination of these first level decisions via effluent charges determined at a second level.