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Bio-economic farm models (BEFMs) are developed to enable assessment of policy changes and technological innovations, for specific categories of farming systems. A rapidly growing number of research projects is using these models and there is increasing interest for application. The paper critically reviews past publications and applications of BEFMs on their strengths and weaknesses in assessing technological innovation and policy changes for farmers and policy makers and highlights key issues that require more attention in the use and methodology of BEFMs. A BEFM is defined as a model that links formulations describing farmers’ resource management decisions to formulations that represent current and alternative production possibilities in terms of required inputs to achieve certain outputs, both yield and environmental effects. Mechanistic BEFMs are based on available theory and knowledge of farm …