Biofuels are now an important resource in the United States because of the Energy Independence and Security Act of 2007. Both increased corn growth for ethanol production and perennial dedicated energy crop growth for cellulosic feedstocks are potential sources to meet the rising demand for biofuels. However, these measures may cause adverse environmental consequences that are not yet fully understood. This study 1) evaluates the long-term impacts of increased frequency of corn in the crop rotation system on water quantity and quality as well as soil fertility in the James River Basin and 2) identifies potential grasslands for cultivating bioenergy crops (e.g. switchgrass), estimating the water quality impacts. We selected the soil and water assessment tool, a physically based multidisciplinary model, as the modeling approach to simulate a series of biofuel production scenarios involving crop rotation and land cover changes. The model simulations with different crop rotation scenarios indicate that decreases in water yield and soil nitrate nitrogen (NO3-N) concentration along with an increase in NO3-N load to stream water could justify serious concerns regarding increased corn rotations in this basin. Simulations with land cover change scenarios helped us spatially classify the grasslands in terms of biomass productivity and nitrogen loads, and we further derived the relationship of biomass production targets and the resulting nitrogen loads against switchgrass planting acreages. The suggested economically efficient (planting acreage) and environmentally friendly (water quality) planting locations and acreages can be a valuable guide for cultivating switchgrass in this basin. This information, along with the projected environmental costs (i.e. reduced water yield and increased nitrogen load), can contribute to decision support tools for land managers to seek the sustainability of biofuel development in this region.