Vietnam, like most developing countries across Southeast Asia, has boosted farm outputs by introducing new crops, production methods and other agricultural innovations. Unfortunately, this process has increased soil erosion and water pollution and caused many other environmental problems. This study looks at the environmental trade-offs that are involved in upgrading people's livelihoods through agricultural improvement. It also investigates how the negative impacts of such changes can be mitigated. The study provides details of how agricultural innovations have harmed the environment. It shows that a land tax policy could be used to reduce these environmental problems. Such a tax, however, will have a negative impact on farmers' livelihoods. Hence, this policy will be strongly resisted given that the North West Region has the highest poverty rate in Vietnam. The study therefore recommends that farmers should be helped to implement sustainable animal husbandry innovations so that their standard of living is not unduly affected.