The capacity of farmers to adapt their businesses and adopt management practices that improve environmental outcomes varies greatly from case to case. Factors influencing this include the state of the farm business and its resources, the extent of the environmental problems, condition of native vegetation (and existing provision of ecosystem services), availability of labour, current financial position, and age of farmer, and family goals. In this paper, results are reported from a study based on 17 sheep-beef farms in Victorian hill country. Information about vegetation, agronomic potential and farm business situation was collected, and the effect on the farm business of adopting four management strategies that could potentially improve farm environmental outcomes was tested. It is shown that reorganizational strategies are available that are economically, financially and environmentally sound. Implications for environmental policy are discussed.