Do the most promising policies to promote sustainable upland farming originate at the local or national level? Will coordination of local and national efforts produce better outcomes? Using a optimization-simulation model of the Manupali watershed in the Philippines we address these issues by comparing the economic and environmental effects of four sets of stylized policy changes: (1) local policies that restrict some forms of land use; (2) local attempts to subsidize environment-friendly technologies; (3) a crop-specific tax levied on vegetable producers; and (4) a hybrid approach that seeks to coordinate local technology initiatives with broader-based incentives rooted in pricing policy. We study the economic and environmental impacts of these stylized policy changes over a 10- year time horizon.