Environmentally-friendly agriculture has been promoted for over two decades as a response to environmental degradation and biological loss. Lake Biwa, which is a major water source in Kinki region, has suffered eutrophication resulting in occurrences of freshwater red tide and blue-green algae bloom. As a result, Shiga Prefectural government has implemented a direct payment subsidy system which would promote the environmentally-friendly agricultural (EFA) practices in order to reduce pollution load and improve the quality of Lake Biwa eco-system. This study aims to determine profit efficiency among EFA rice farmers in Shiga Prefecture using the Stochastic Frontier Approach. A cross-sectional survey was conducted among 82 farmers from top rice-producing cities in Shiga Prefecture, using a structured questionnaire. Results showed that EFA farmers increased their net farm income by 99 %, amounting to 652,414 JPY/ha compared to the 658,553 JPY/ha income of conventional farmers. However, production costs were also found to be higher among EFA farmers, especially on labor costs, which accounted for 42 % of the total production cost. The study investigated the farmer and farm-specific factors affecting deviations from the profit frontier and discussed the policy implications for the promotion and popularization of EFA in the future.