Until recently environmental issue has been largely ignored in conventional economic analysis and decision-making, whose main objective has generally focused on profit maximization. It is also stressed that evidence does not provide a clear response to the question of whether economic growth chapter 17 investments multiple choice environment protection and conservation are conflicting or complementary goals.

Rather it shows that trade-offs and complementarities depend on various other factors such as: the scale and the structure of the economic and the social systems, technology, efficiency with which natural resources are used. In addition it is pointed out that economic and environmental issues are two important but not absolute conditions for ensuring a sustainable development. A third dimension, the social dimension, has also to be accounted for because humans are integral parts of ecosystems. Humans and ecosphere are partners in ensuring a good quality of life. It follows that protecting natural resources, their composition, structure, and functions, is protecting humans and life on earth. Finally, it is argued that as not all of these objectives can be maximized, it is important that trade-offs among them are analysed and made clear and that any decision-making focusing on one or two of these dimensions may not lead to sustainable development. Considerable work has also been undertaken to analyse the interactions between some social aspects and natural resources depletion, though more investigation is still required in this area.

As a result of this work, decision-making in development planning activity has also undergone substantial changes in terms of both the general approach to decision-making and the analytical techniques and tools. Decentralized decision-making is often considered to be more effective in addressing environmental problems. Chapter 2 concludes that though environmental problems are generally location-specific, there is no valid reason to assume that all related decisions should be taken at the local level. Even when geographical decentralization is advisable, this does not mean that decision-making at the various geographical levels are independent.

On the contrary, decentralization must be thought of as a network of a multitude of decision-making centres linked by the same vision for the future, which is usually established on the basis of strategies and plans prepared at the national or international levels. Moreover, geographical decentralization does not necessarily require that institutional decentralization goes as far as devolution. Various combinations of forms of decentralization can be found to cope with environmental and natural resources management problems, depending upon the specific conditions. A number of criteria have been suggested to help find the most effective forms of decentralization.

It is argued that centralization and decentralization should not be considered antagonist conditions. In most countries an appropriate balance of centralization and decentralization is essential to the effective and efficient management of environmental problems. Not all functions can or should be financed and managed in a decentralized fashion. And even when national governments decentralize responsibilities, they often continue to play an important role in policy and supervisory functions.

The role of the central and local government in decentralized decision-making is analysed in detail in Chapter 3. It is argued that proper and effective environmentally sustainable decision-making requires profound institutional and cultural change in the society. Also important to achieve the above changes is the adoption of a decision-making approach able to better account for the complexities of the environmental problems and of the sustainability concept. In Chapter 4, the stages of decision-making that deserve particular attention from the environmental point of view are reviewed. It is stressed that two conditions are of primary importance for a proper consideration of environmental problems in decision-making, namely well defined spatial units and information generation. The tools available to perform effective decision-making integrating environmental considerations are examined. The integration of environmental concern in decision-making at the decentralized level is crucial and urgent if the negative trend in the stock of natural resources is to be reversed.

However, exchange rate, trade and fiscal policies have substantial influence on relative prices and incentives in the use of natural resources at the decentralized level. In this section a number of policy tools available at the district level are discussed. These encompass command and control, economic and institutional instruments. Sometimes also named regulatory measures, command and control instruments are generally aimed at reducing or minimizing the impact of human activities on the environment through restrictive laws, or at prohibiting certain activities.