The present study was taken up in the district to study the externalities of sago pollution and to value them using environmental valuation techniques. The results showed that the decline in crop production and in value of animal husbandry production were directly related with the pollution intensity. In seriously affected farms, the agricultural damage could be reduced by undertaking more of land averting expenditure and by improving both land quality index and dry season water quality index. The hedonic model showed that the farm income and distance between farm and sago factory had positive relationship with land value. The contingent valuation in seriously affected farms showed that the household head?s education and household size had positive influence on willingness to pay. The analyses of best management practices revealed that the farmers could adopt combination of tolerant crops and practice dairy activity. The present study will help the farmers to analyze the causes and effects of sago pollution on crop production, income, soil fertility and health and also to formulate appropriate policy options to improve the standard of living of the affected parties.