In the result of geomechanical transformations associated with the activity of open cast brown coal mining, some changes in air-water relations may occur on arable land adjacent to these regions usually referred to as hydrological alterations. However, they do not always need to result in soil degradation, i.e. in the deterioration of their production potentials. This will often depend on the distance of fields from the workings, value of the arable land (soil quality class), type of water management, etc. On the basis of long-term studies carried out in the area of operation of two brown coal mines – KWB "Konin" and "Adamów" – on arable land and grasslands of over 60 villages on the total area of 30 thousand hectares it was possible to develop evaluation criteria for the extent of soil degradation and work out principles for compensation payments for farmers. Three zones and appropriate sub-zones of soil susceptibility to drainage were determined and clear and simple criteria for the estimation of the extent of arable land and grassland degradation were worked out. Furthermore, the authors proposed simple and readable systems to calculate compensatory payments to be paid to fam1ers taking into account the state of soil degradation, value of agricultural land (price of 1 ha of land of approp1iate class) and the area of damaged land. The degree of soil degradation, both of arable land and grasslands, ranged from 10 to 30%. In the case of grasslands, additionally, an appropriate sum of money was allocated to compensate for sward recultivation.