Marine ecosystems are affected by water pollution originating from coastal catchments. The delivery of water pollutants can be reduced through water pollution abatement as well as water pollution treatment. Hence, sustainable economic development of coastal regions requires balancing of the marginal costs from water pollution abatement and/or treatment and the associated marginal benefits from marine resource appreciation. Water pollution delivery reduction costs are, however, not equal across abatement and treatment options. In this paper, an optimal control approach is developed and applied to explore welfare maximizing rates of water pollution abatement and/or treatment for efficient diffuse source water pollution management in terrestrial-marine systems. For the case of diffuse source dissolved inorganic nitrogen water pollution in the Tully-Murray region, Queensland, Australia, (agricultural) water pollution abatement cost, (wetland) water pollution treatment cost and marine benefit functions are determined to explore welfare maximizing rates of water pollution abatement and/or treatment. Considering partial (wetland) treatment costs and positive water quality improvement benefits, results show that welfare gains can be obtained, primarily, through diffuse source water pollution abatement (improved agricultural management practices) and, to a minor extent, through diffuse source water pollution treatment (wetland restoration).