Sustainable forest management has become the salient cross-cutting theme in forestry throughout the world today. This paradigm recognizes that forests are managed for a wide variety of ecological, economic, and social benefits. This explicit recognition of many outputs and services as management objectives has recast our economic analyses on the values of forests. Similarly, our policy tools must adapt to achieve the goals of multi-functional forestry across a broad range of ownerships and values. We review factors that affect forest policy selection, including the nature of goods and services, social values, and economic values. We then discuss traditional and newly developing natural resource policy tools in this context and discuss their applications in meeting the objectives of forest landowners and society in achieving multi-functional sustainable forestry goals in the future.