Recent investigations have indicated that environmental and conservation policies frequently fail to reach anticipated aims, which raises concern over the cost-effectiveness of governmental policy-related expenditure. The limited effectiveness of policies is often attributed to methodological aspects of policy implementation. However, an alternative reason can be the limited internalization of policies, so that these are only implemented to a minimum level to attain benefits or avoid penalties. It is postulated that increased internalization of policies can considerably improve their effectiveness and that suitable institutional arrangements exist to support such increases in internalization. In this paper, we review the available literature on internalization and its institutional aspects, and propose a framework, based on self-determination theory, for evaluation of potential internalization by farm managers that are expected to implement policies. This method was applied to a small case study for dairy farmers in the nationally important landscape of the Northern Friesian Woodlands, The Netherlands. The results showed that organic farmers were internally motivated for nature conservation and had strong institutional links. They were more likely to internalize the goals of environmental policy schemes than conventional farmers who focused predominantly on financial rewards. We suggest that policy developers promote internalization of policies by tuning policy instruments to the specificities of farmers' motivations to preserve farmers' nature and to focus on institutional support to help internalization.