The relationships between agriculture, the environment, and development are deep and complex. By 2050 a 70 per cent increase in production will be needed to feed an additional 2.7 billion people on an already degraded natural resource base. In light of this and amid the realities of climate change, the agricultural sector is now coming to terms with its potential role for contributing to – rather than diminishing - environmental, institutional, social and economic resilience. The purpose of this paper is to highlight the importance of environmental management and governance in the agricultural sector; to present environmental goals, requirements, entry points, and strategies/approaches to capacity development for the environment (CDE) in this sector; and to discuss implications for donors. The focus is on CDE in a developing country context. The paper recognises that CDE must be seen as part of an endogenous process of change, and that it must operate at multiple levels: the enabling environment, the organisation, and the individual. The paper argues that CDE should focus on the sustainable production and provision of sufficient, safe, and nutritious food that simultaneously builds and reinforces ecosystem resilience, leading to equitable and economically viable livelihoods at an adequate scale. The paper links these concepts to the country systems approach to development assistance advocated in the Paris Declaration on Aid Effectiveness.