The question which this paper addresses concerns the types of environmental and resource-related agricultural policy adjustments that could properly address the costs of resource degradation and increase long-term prospects for sustainable development. Various public policy approaches (e.g., Polluter-Pays Principle, fiscal measures, regulations, etc.) are discussed and analyzed with regard to their environmental and resource impacts. The paper provides illustrative experiences from industrial and developing nations and, where possible, lessons and insights of relevance to policy making in developing countries are sought.