In the European Union (EU) context, regulatory instruments and incentive schemes targeting individual farmsremain the main policy instruments implemented to control diffuse pollution from agriculture. Yet, collectiveapproaches to policy implementation have been recently developing. This article aims at assessing the potentialfor hybrid policy instruments relying on collective action among farmers to limit diffuse nitrate pollution fromagriculture. Transaction cost economics are used to assess the potential advantages of collective action as acomplement to regulatory and incentive policy tools. The conditions under which such hybrid forms of governancemay be successful are identified using the Social-Ecological System (SES) framework. A review ofempirical studies documenting cases of collective action for policy implementation in the EU context serves as abasis for the identification of the factors likely to affect the potential of collective approaches for water qualitymanagement in agriculture. The analysis relies more particularly on two cases: the Environmental Cooperativesin the Netherlands and the “Ferti-Mieux” operations in France. The results suggest that collective action is arelevant tool to consider for improving the effectiveness and cost-effectiveness of policies targeting diffusepollution from agriculture. In particular, relying on farmers’ cooperation for policy implementation may beassociated with advantages in terms of transaction costs. However, such advantages will be effective under anumber of conditions related to the characteristics of the water resource, the actors involved, the governance ofcooperation and the broader economic and institutional contexts.