Sustainability has become a central issue in the agricultural sector, both for researchers, producers and policy-makers. The two main objectives of this paper are: (1) to present an holistically designed ecological-economic model to evaluate farm and field-level environmental-economic tradeoffs with special reference to multi-objective policy-making and (2) to evaluate the impact of the Agenda 2000 reform on sustainability of organic farming. The model was implemented for the case of organic dairy farming in northern Tuscany (Italy). Minor differences were found between the environmental and technical results of the model under the MacSharry and Agenda 2000 reforms. However, gross margins under the Agenda 2000 regulations were considerably higher. The spatial detail of the model proved particularly useful in the evaluation of the impact of environmental sustainability thresholds. Sensitivity analysis indicated the weak environmental points of the farming system (in this case mainly soil erosion) and the feasible levels of the various environmental aspects and their associated socio-economic costs. The application of the model for alternative policy scenarios provided insights into ways in which the cost economic efficiency of the Agenda 2000 agri-environment support scheme could be improved. The paper concludes with suggestions for further model research to contribute to the design of cost-efficient agri-environment payment schemes. (C) 2003 Elsevier Ltd. All rights reserved.