In recent years there has been increasing concern regarding agriculture's deleterious impacts on the natural environment. Natural habitats and landscapes are viewed as suffering at the expense of modem farming methods, and air and water quality have also deteriorated. Agricultural policy has played a significant role in these developments with the continuing incentives that it provides for the intensification of agricultural production. In response to these changes in the levels, and awareness, of the agricultural sector's negative impacts on the environment, many policy proposals have emerged which aim to reduce these negative effects. The methodology employed in this thesis is to consider such policy developments, and to analyse the effects of a number of existing European policies, all of which aim to reduce pollution from livestock waste, on a sample of specialist dairy farms in the North West of England. The section of the thesis concerned with policy development commences with a critical review of present government policy towards farm pollution, and in particular, dairy farm pollution. The need for the coordination of agricultural and environmental policy is subsequently discussed, and the practical steps taken towards achieving this policy integration in the UK and the EC are reviewed. Two factors are identified as having hampered efforts to coordinate agricultural and enviromnental policy: the relatively poor empirical understanding of agri-environmental trade-offs, and the political and institutional obstacles to agricultural policy reform. These political and institutional factors are discussed in some detail, in the light of a history of the development of UK agricultural policy. Empirical knowledge of agri-environmental relationships are the subject of the second section of the thesis which begins with a discussion of different approaches to modelling agriculture and the environment. Linear Programming techniques are adopted for the empirical work of the study, and these methods are used to construct a number of farm models, representing dairy producers in the North West. These farm models incorporate anonymised data from the Farm Busmess Survey and a 1991 Waste Handling Survey, allowing for the evaluation of alternative policies in economic and enviromnental terms. Three sets of policies are analysed, comprising EC guidelines on livestock waste, a series of Dutch standards on phosphates from animal waste and a number of regulations that operate in various regions of Europe. Most of the policies, which take the form of maximum stocking rates, are found to have little or no effect on the studied farms. However, the issue of the area of land that waste is currently spread on is identified as a critical factor, and the policies are therefore simulated again with respect to this spreading area rather than total farm area. The results are considerably more dramatic when imposed in this way. The effects of the policies on the farm models are also assessed using an enviromnental sub-model which generates a number of indicators of the farms' pollution load. This sub-model also generates a farm-specific "risk of pollution" index, enabling the targeting of policies to be considered. It is found that some farms with relatively low risks of pollution are affected while some relatively high risk farms are left unaffected. Finally the measures necessary to reduce the risk of pollution on individual farms are considered. This is done by forcing the risk index progressively lower and determining the effect on other variables such as farm gross margin and dairy numbers. In this way, farm-specific agri-environmental trade-offs can be obtained between the risk of pollution and, for example, total farm gross margin.