too many polygons

For my application, I generate 1 mile squares, based on a few
databases, of where plants grow in california. It works reasonably
well, but generates thousands of square mile polygons. I'm thinking of
two solutions to the performance issue:

1. Combine many of the squares into a few big polygons. I have in mind
an algorithm to do this, but am open to suggestions. Especially for
algorithms for aggregating polygons. I'm not wild about this approach.

2. Tiles. I've started reading up on them.

My question is what tools are available for generating tiles from
polygons? Since there are a lot of plants, I'm thinking I'm going to
have to dynamically generate them.

Thanks.

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