Ex-ante impact assessment of agricultural, environmental, and rural policies has become an integral part of political decision making processes in the EU. While there is a large variety of agri-environmental modelling tools available to analyse likely social, economic, and environmental impacts of these policies, scientifically well-founded ex-ante policy assessment tools capturing institutional dimensions are still missing. In this paper, we introduce a formalised procedure for modelling – ex-ante – institutional aspects for policy implementation: the ‘Procedure for Institutional Compatibility Assessment’ (PICA). It has recently been developed within the SEAMLESS project as a component of an integrative modelling framework for ex-ante assessment of policy impacts on sustainable development. PICA is based on the assumption that the effectiveness of a policy and the cost-effectiveness of its implementation largely depend on the degree of compatibility between this policy and the institutional context in the respective countries and regions. It has been designed as an explorative and flexible, yet formalised methodology that enables policy makers to identify at an early stage potential institutional incompatibilities. After providing a brief overview of relevant approaches for policy assessment we elaborate on the four distinct steps of PICA and use a core element of the EU Nitrate Directive to illustrate its function.