A variety of ecosystem services are impacted by the transitory shift that the mountain agricultural system is going through from traditional crop farming to a cash crop economy. The goal of the study was to comprehend how different farming methods and decision-making processes contribute to balancing the positive and negative aspects of an agroecosystem in mountainous regions. The study elaborates on the various farm types' capacity to support sustainable agroecosystems by exploring a non-monetary assessment based on biophysical indicators and farmers' perspective. Via a bottom-up methodology, an indicator-based framework was used, and primary field data collection and household surveys in two types of village settlements—connected and isolated—were used to estimate the numerical values of the selected indicators. The study's policy recommendation is that comprehensive quantitative data on agricultural landscape planning and governance would be useful in shedding light on the ways in which farming practices and agricultural policies can affect the socioeconomic and environmental consequences of agricultural policy, thereby promoting the development of sustainable livelihoods.