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ABSTRACT: The European Union's support for farming in ‘less favoured areas’ (LFAs) is currently implemented in the United Kingdom through headage payments for cattle and sheep, although reforms to the system are under way. These payments have caused environmental concern, since, although formally social in nature, they are implicated in processes of agricultural intensification and management practices that reduce ecosystem integrity and landscape interest. In this paper, we examine the extent to which enhancement of the policy mix could take such concerns into account. Initially, we review the evidence of environmental change, also taking into account afforestation and increasing recreational demands on the hills and uplands. An analysis of the environmental perspective is interwoven with current economic, cultural and social difficulties, based on summaries of farmer attitudes drawn from a range of inquiries. We then examine options proposed for change, particularly the conversion of the Hill Livestock Compensatory Allowances headage payments to an area-based compensation, and greater cross-compliance with environmental preconditions. We conclude that scope exists for improved integration of social support for farming with measures to conserve and enhance the environment in hill and upland areas. However, more coherent policies that encompass marketing to pro-ecological, pro-social consumers, education and research, community and infrastructure could strike a more effective balance in attaining objectives for farming and society as a whole, by according a pivotal role to organic farming as a standard for low-input agriculture. [ABSTRACT FROM AUTHOR]