During the 1970s, American gerontologist M. Powell Lawton and colleagues saw the person–environment system as fundamental to defining the quality of later life. They proposed the environmental docility hypothesis that weighed whether the more competent the person, the less dependent they are on environmental circumstances. This work was later advanced to show that environmental pro-activity, including adaptation, could reinforce control and autonomy. While that theoretical development focused on the micro-environment of accommodation, it can be applied to the macro-environment of community living. This paper, which utilises data from an empirical study ‘Environment and Identity in Later Life’, examines both the micro and macro scales, develops the theoretical content of the person-competence model, considers the complexity of person–environment interaction, and argues that over time some people find that their attachments to particular environments are compromised by declining competence or changes in the environment, or both. The point at which change impacts on an individual's independence and wellbeing is reached when adaptive behaviour cannot rebalance the macro- and micro-environmental press. This point, termed ‘option recognition’, leads to a range of strategic responses including: modification of behaviour or environment; structural support using formal and informal services; and relocation; all of which impact on self-identity.