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? This paper uses an optimization-simulation model of the Manupali watershed in the Philippines to investigate these issues. It compares 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 production; and (4) a hybrid approach that seeks to coordinate local technology initiatives with a broader-based national pricing policy.