Sandy soils in the Netherlands are mainly used for dairy farming. As a result of intensification in the recent past, valued functions of sandy regions now are threatened by high emissions of nitrogen (N) and phosphorus (P) and by increased water consumption by forage crops. Dairy farms could probably meet environmental standards by expanding farm size to reduce milk production intensity per hectare. However, land is very expensive and therefore extensive farming probably will not be sustainable from an economic point of view. Moreover, a societal demand exists for alternative use of available land, like expanding nature reserves. Export of slurry, to increase farm output of nutrients, is also expensive and may lead to environmental problems elsewhere. Improved utilisation efficiency of fertilisers, feeds and water is proposed as a strategy to realise environmental targets in an economically attractive way. Experimental results of the prototype system 'De Marke' indicate that an average intensive commercial farm can halve inputs of fertilisers and feeds at least, without the need to reduce milk production per hectare or to export slurry. Besides, water consumption of crops can be reduced by 13%, leading to an increase in groundwater recharge by 570 m 3ha -1. Nitrate concentration in the upper groundwater decreased from 200 to 50 mg l -1. Until so far, changes in soil fertility did not lead to serious agricultural problems but costs of milk production increased by 5%. However, additional costs probably can be compensated if the extra groundwater is 'harvested' by water companies, because of high cost of purification of surface water. In 1999, the examined strategy of improved resource management was implemented on 12 commercial farms, representing the full range of conditions for dairy farming in the Netherlands.