Environmental problems in agriculture have proven difficult to address due to the spatial heterogeneity and temporal variability intrinsic to agriculture. Agriculture is largely a struggle against nature; both its sustainability and the prospects for improving environmental performance and farm income simultaneously are thus inherently limited. Agriculture's high degree of variability makes direct regulation inefficient. Subsidies for improving environmental performance can have negative consequences and have proven ineffective in practice, due largely to bureaucratic culture. Pollution taxes should be the most effective and efficient form of policy. Interdisciplinary research is needed to provide models for performance evaluation.