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Land degradation is caused by and has impacts on both the social and natural components of coupled human-environment systems. However, few studies integrate both aspects simultaneously. The main objective of this study is to test a method to evaluate land degradation based on the integration of aggregate metrics of biophysical and socio-economic "degradation". We applied a framework that integrates the biophysical and socio-economic dimensions of land degradation to test the hypothesis that macro-economic policies, and in particular agricultural subsidies, are an important driving force of land degradation in marginal regions of the Mediterranean Europe. We analysed the influence of subsidies on the profitability of each crop and livestock type found in a sample of farms in a region of northern Greece. Spatial and socioeconomic data on agricultural households were collected to link remote sensing data and land degradation maps to socio-economic conditions of these households, as measured by the standard gross margin. The results demonstrate that subsidies provide a crucial socio-economic support to maintain the profitability of agricultural activities but may also promote land-use practices with damaging ecological impacts. Different levels of biophysical and socio-economic "degradation" were associated with different land use practices. The integration of the socio-economic and biophysical dimensions of land degradation reveals associations that would not be detectable if indicators along one dimension alone would be used. (C) 2008 Elsevier B.V. All rights reserved.