Shallow coastal lagoons are environments where a dynamic equilibrium exists between water quality and seagrass cover. Dense seagrass canopies limit the resuspension of bed sediments thereby creating a clearer water column and a positive feedback for seagrass growth. Positive feedbacks are often associated with the existence of bistable dynamics in ecosystems. For example, a bare and a seagrass covered sediment bed could both be stable states of the system. This study describes a one-dimensional hydrodynamic model of vegetation-sediment-water flow interactions and uses it to investigate the strengths of positive feedbacks between seagrass cover, stabilization of bed sediments, turbidity of the water column, and the existence of a favorable light environment for seagrasses. The model is applied to Hog Island Bay, a shallow coastal lagoon on the eastern shore of Virginia. The effects of temperature, eutrophication, and bed grain size on bistability of seagrass ecosystems in the lagoon are explored. The results indicate that under typical conditions, seagrass is stable in water depths < 2.2 m (51% of the bay bottom deep enough for seagrass growth) and bistable conditions exist for depths of 2.2–3.6 m (23% of bay) where the preferred state depends on initial seagrass cover. The remaining 26% of the bay is too deep to sustain seagrass. Decreases in sediment size and increases in water temperature and degree of eutrophication shift the bistable range to shallower depths, with more of the bay bottom unable to sustain seagrass.