This study examines the dependency between physical and anthropogenic systems in arable farming. The dynamic simulation model, which has its methodological origins in the modeling traditions of environmental systems analysis and microsimulation, reproduces the mutual links between the physical flows (e.g. energy, materials, emissions, and products), the farmer as a decision-making agent, and structural conditions influencing the farm. In running the model, the intention is to answer the question: What are the impacts on profitability and the environment (i.e. greenhouse gas effects, eutrophication, acidification, and energy use) of variations in prices, subsidies, the farmer's environmental values, and the farmer's skill in making production allocation choices? The results of the model simulations indicate, for example, that in terms of economic performance, a farmer can choose between two relatively sustainable strategies—either to specialize in organic production (thereby benefiting from higher subsidies and output prices), or to focus on conventional cultivation and use of pesticides and fertilizers (thereby benefiting from large yields). Regarding environmental impacts, there was no clear-cut divide between organic and conventional farming due to difficulties in allocating the use of manure. This finding is essentially related to the choice of system boundary, which is thoroughly discussed in the paper.