Agri-environment is one of the most widely supported rural development policy measures in Scotland in terms of number of participants and expenditure. It comprises 69 management options and sub-options that are delivered primarily through the competitive ‘Rural Priorities scheme’. Understanding the spatial determinants of uptake and expenditure would assist policy-makers in guiding future policy targeting efforts for the rural environment. This study is unique in examining the spatial dependency and determinants of Scotland's agri-environmental measures and categorised options uptake and payments at the parish level. Spatial econometrics is applied to test the influence of 40 explanatory variables on farming characteristics, land capability, designated sites, accessibility and population. Results identified spatial dependency for each of the dependent variables, which supported the use of spatially-explicit models. The goodness of fit of the spatial models was better than for the aspatial regression models. There was also notable improvement in the models for participation compared with the models for expenditure. Furthermore a range of expected explanatory variables were found to be significant and varied according to the dependent variable used. The majority of models for both payment and uptake showed a significant positive relationship with SSSI (Sites of Special Scientific Interest), which are designated sites prioritised in Scottish policy. These results indicate that environmental targeting efforts by the government for AEP uptake in designated sites can be effective. However habitats outside of SSSI, termed here the ‘wider countryside’ may not be sufficiently competitive to receive funding in the current policy system. •Scotland's agri-environmental measure was examined using spatial econometrics.•A range of expected explanatory variables were found to be significant.•Spatial models had an improved output compared to aspatial.•Results indicate the effectiveness of policy targeting in designated areas.