In the European Union (EU) context, regulatory instruments and incentive schemes targeting individual farms remain the main policy instruments implemented to control non-point source pollution from agriculture. Yet, collective approaches to policy implementation have been recently developing. Since 2014, the EU rural development policy gives the opportunity to groups of farmers to commit jointly to collective agri-environmental schemes. There also exist some examples of voluntary cooperation among farmers for achieving water quality regulatory objectives. However, there has been no systematic assessment of the costs and benefits of such agri-environmental cooperation. The article aims at assessing the potential of hybrid policy instruments relying on collective action among farmers for limiting diffuse nitrate pollution from agriculture. Transaction costs economics are used as a framework to assess the potential advantages of collective action as a complement to regulatory and incentive policy tools. To identify the conditions under which such hybrid forms of governance may be successful, we use the Social-Ecological Systems Framework. A review of empirical studies documenting cases of collective action for policy implementation in the EU context serves as a basis for the identification of the factors likely to affect the potential of collective approaches for water quality management in agriculture. The analysis relies more particularly on two cases: the Environmental Co-operatives in the Netherlands and the “Ferti-Mieux” operations in France. The results suggest that collective action is a relevant tool to consider for improving the effectiveness and cost-effectiveness of policies targeting nonpoint source pollution from agriculture. In particular, relying on farmers’ cooperation for policy implementation may be associated with advantages in terms of transaction costs. However, those advantages will be effective under a number of conditions related to the characteristics of the water resource, the actors involved, the governance of cooperation and the broader economic and institutional contexts.