Soil acidification due to crop cultivation and nitrogen fertilizers limits crop yields worldwide. Lime application is the most common practice to mitigate soil acidity. There are complex biophysical interactions between the application of lime and nitrogen fertilizer, crop yield, and greenhouse gas emissions. This thesis presents an economic analysis of optimal lime and nitrogen fertilizer applications to manage soil acidity, nitrogen fertility, and greenhouse gas emissions in Western Australia. It also assesses the costs and benefits of carbon taxation applied to agriculture.The results show that optimal lime application strategies depend on rainfall, soil pH, and the source of nitrogen.