Currently, there is a major concern regarding agri-environmental issues. Farmers are viewed not only as food suppliers but also as the custodians of the countryside. This role of farmers has been officially acknowledged in the EU Common Agricultural Policy (CAP) through a number of regulations that enforce agri-environment schemes and cross-compliance. However, under some circumstances these regulations have proved to be ineffective. Organic farming can play an important role for agri-environment schemes. The main aim of this study is to show the relevance of the assessment of the environmental performance of conventional and organic farming systems for the development of efficient agri-environment schemes. An holistically designed ecological-economic model was applied under current EU regulations and different policy scenarios. The model is based on a standard linear programming farm model extended with emission and evaluation figures retrieved from ecological models. Spatial aspects, such as pedo-climatic conditions, were included in the model. The approach was implemented for the case of northern Tuscany. Results indicated that organic farming systems (OFSs) were environmentally more beneficial than conventional farming systems (CFSs) and that current CAP market and income support schemes gave cause for an intensification of farm production and for an increase of environmental harm. They also showed that conventional farmers willing to produce environmental performances comparable to those of organic agriculture or to comply with environmental sustainability thresholds (ESTs) incur opportunity costs due to the need of application of organic crop management and/or extensification of the crop plan. Conclusions were drawn on the environmental performances of OFSs and CFSs, the impact of EU policies on sustainability of agriculture, opportunity costs of environmental benefits and on the practical use of the modelling framework for policy design. (C) 2003 Elsevier B.V. All rights reserved.