The objective of this study was to integrate process life cycle assessment (LCA) into an activity-based microeconomic model of production to quantify environmental impacts induced by economic incentives imposed on individual producers. The economic incentives may include price changes, technological innovations and governmental taxes/subsidies that are beyond the scope of Input-Output-based LCA. In this approach, however, traditional normative activity analysis hardly reproduces the observed input variables referred to as “reference point”, as is often the case with linear programming model widely used for farm management. Consequently, the resultant LCA deviates from the original LCA that is evaluated at the reference point. This study made an attempt to bridge the gap between the theoretically derived LCA and the original process LCA by introducing the positive mathematical programming (PMP) approach, which was established by Howitt. The PMP-based LCA was applied to conventional and reduced tillage farming systems in Hokkaido, northern Japan, to consider its potential for analyzing an area-based farm policy and to discuss several limitations to be addressed in future research.