The introduction of Environmentally Sensitive Areas (ESAs) in the United Kingdom in March 1987 is widely regarded as an important innovation in European rural policy. In the UK there are now 19 ESAs, covering about 790,000 hectares which amounts to some 4.3% of the agricultural land. This paper discusses the background to the introduction of ESAs as an agricultural conservation policy instrument. Since the late 1970 s, conflicts between modern farming and conservation have been a key issue in the UK countryside. Conservationists and economists have criticized intensive modern farming which has not only produced agricultural surpluses but also caused destructive damage to the rural environment. Under those circumstances, the Agriculture Act 1986 was enacted. The Act aims to achieve a reasonable balance between the promotion of a stable and efficient agriculture industry and the conservation of the natural beauty and amenity of the countryside. The legal basis of ESAs is found in Section 18 of the Act. The paper also examines the system and the achievements of the ESA scheme in England. Farmers in ESAs who are willing to carry out environmentally beneficial practices are offered hectarage payments. These payments help farmers to offset pressure to intensify production methods, and provide them an incentive to conserve landscape, wildlife and historical features on their land. In England the ESA scheme has been well received by both farmers and some conservationists, and in total 92% of the targetted land has entered into the scheme. But it is too early to conclude whether the scheme has achieved full success or not. The idea that farmers' incomes can be supported by paying them to conserve the rural environment is likely to be an important one in future socio structural policy. It is, therefore, worth while to keep attention to the evolution of the ESA policy.