Sustainable agriculture is prescribed as a policy approach that maximizes economic benefits while maintaining environmental quality. It is argued that this approach is human capital intensive and encourage$ new scientific developments. To attain sustainability, economic incentives for the development and adoption of precision technologies (with minjmal residues that cause environmental damage) have to be developed. Taxation and tradable permits are desirable pohcies to attain first-best solutions: however, when heterogeneity and lack of information problems are significant, alternative institutions have to be developed. The paper presents and discusses such institutions.