I've thought it would be simply changing the CONFIG_ENV_SIZE in the u-boot source along with changing the size in the userspace /etc/fw_env.config to match, but this is not the case.
In order to update the environment size with flash memory (in particular on the Tegra), we need to:
CONFIG_FILEis defined in /tools/env/fw_env.h in uboot src (make sure this line is uncommented (#define CONFIG_FILE "/etc/fw_env.config")
CONFIG_ENV_SIZEto desired size (/include/configs/tegra-common.h in uboot src), note it needs be 4k aligned for flash if using mmc
Match Env. size below to the size of
Set the Device offset below to ((end of environment addr + 1) -
CONFIG_ENV_SIZE) (turns out uboot environment is stored at the end of the boot partition)
Keep Flash sector size below set to 0x2000 if Env. size differs