There is a growing scientific interest in using microalgae to remove nitrogen and phosphorus water quality improvement. There are, however, limited studies available on estimating economic benefits of phosphorus reduction through microalgae. We have applied replacement cost method to calculate monetary values of the effect of microalgae on the water quality of two agricultural reservoirs in Korea. All of 403 domestic sewage wastewater treatment plants being operated currently are analyzed in terms of construction costs as well as operation costs. After carefully selecting treatment plants which are most applicable to each reservoir, we calculated annual total costs of each selected treatment plants to find out the most efficient one. Result shows that for Dong-Bang and Sang-Sung reservoirs, the economic benefits of reducing phosphorus from inflow concentration of 2mg/l to 0.5~0.1mg/l through microalgae are estimated at 95,259,900~120,662,540 Korean won and 368,018,951~466,157,338 Korean won, respectively.