The objective of this study was to account for environmental variables to model non-genetic random effects for carcass traits in Hanwoo beef cattle. This model was compared to the traditional model that uses farms as an independent component to model non-genetic random effects. Heritability estimates for all carcass traits in our study ranged from 0.33 to 0.39 when using independent farm effects, whereas with the use of environmental variables, estimated heritabilities dropped and ranged from 0.11 to 0.31. In addition, prediction accuracy increased from a range of 0.39 to 0.45 to a range of 0.50 to 0.58 for all traits when modelling farm effects with environmental variables. This result suggests that environmental variables explain a considerable amount of the observed phenotypic variance, and that not accounting for such environmental variation could upwardly bias heritability estimates. Furthermore, an improvement in the model prediction accuracy was observed when accounting for environmental variables.