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This paper presents a methodology for developing state indicators, reflecting the provision of environmental public goods from agricultural landscapes. The methodology involves a structured use of meta-criteria and criteria for developing indicator variables and indicators, along with a coherent set of indicators. These indicators are aimed at providing a basis for determining agri-environmental payments to farmers. They are estimated at the object level, that is, per field or field element, so payments can be set that lead to an efficient resource allocation, structure of incentives and production. We find that, according to the criteria assessments for the Swedish agri-environmental situation, it is best to use a set of seven composite indicators on arable fields, permanent grasslands, linear elements, point elements, forest edges, bio-rich trees and relics. By estimating the indicators in two case study areas, we show that environmental services vary considerably between objects, indicating that value-differentiated payments may work as an efficient instrument in practical policy making. [ABSTRACT FROM AUTHOR]