Summary 1. Increasing concern over the environmental impact of agriculture in Europe has led to the introduction of agri-environment schemes. These schemes compensate farmers financially for any loss of income associated with measures that aim to benefit the environment or biodiversity. There are currently agri-environment schemes in 26 out of 44 European countries. 2. Agri-environment schemes vary markedly between countries even within the European Union. The main objectives include reducing nutrient and pesticide emissions, protecting biodiversity, restoring landscapes, and preventing rural depopulation. In virtually all countries the uptake of schemes is highest in areas of extensive agriculture where biodiversity is still relatively high and lowest in intensively farmed areas where biodiversity is low. 3. Approximately euro24.3 billion has been spent on agri-environment schemes in the European Union (EU) since 1994, an unknown proportion of it on schemes with biodiversity conservation aims. We carried out a comprehensive search for studies that test the effectiveness of agri-environment schemes in published papers or reports. Only 62 evaluation studies were found originating from just five EU countries and Switzerland (5). Indeed 76% of the studies were from the Netherlands and the United Kingdom, where until now only c. 6% of the EU agri-environmental budget has been spent. Other studies were from Germany (6), Ireland (3), and Portugal (1). 4. In the majority of studies, the research design was inadequate to assess reliably the effectiveness of the schemes. Thirty-one percent did not contain a statistical analysis. Where an experimental approach was used, designs were usually weak and biased towards giving a favorable result. The commonest experimental design (37% of the studies) was a comparison of biodiversity in agri-environment schemes and control areas. However, there is a risk of bias if either farmers or scheme coordinators select the sites for agri-environment schemes. In such cases, the sites are likely to have higher biodiversity at the outset compared to the controls. This problem may be addressed by collecting baseline data (34% of studies), comparing trends (32%) or changes (26%) in biodiversity between areas with and without schemes, or by pairing schemes and control sites that experience similar environmental conditions (16%). 5. Overall, 54% of the examined species (groups) demonstrated increases and 6% decreases in species richness or abundance compared with controls. Seventeen percent showed increases for some species and decreases for other species, while 23% showed no change at all in response to agri-environment schemes. The response varied between taxa. Of 19 studies examining the response of birds that included statistical analysis, four showed significant increases in species richness or abundance, two showed decreases and nine showed both increases and decreases. Comparative figures for 20 arthropod studies yielded 11 studies that showed an increase in species richness or abundance, no study showed a decrease and three showed both increases and decreases. Fourteen plant studies yielded six studies that showed increases in species richness or abundance, two showed decreases and no study showed both increases and decreases. 6. Synthesis and applications. The lack of robust evaluation studies does not allow a general judgment of the effectiveness of European agri-environment schemes. We suggest that in the future, ecological evaluations must become an integral part of any scheme, including the collection of baseline data, the random placement of scheme and control sites in areas with similar initial conditions, and sufficient replication. Results of these studies should be collected and disseminated more widely, in order to identify the approaches and prescriptions that best deliver biodiversity enhancement and value for money from community support. Journal of Applied Ecology (2003) 40, 947-969