Since the signing of the Peace Accordsin 1996, Guatemala has made substantial progress inconsolidating peace and democracy. While progress insocioeconomic development has been uneven, there have beenimportant gains in education and health coverage, sustainedincreases in social sector spending, improved coverage ofbasic utility services, and better management of publicfinances, among other gains. Unfortunately, progress hasbeen slower than expected in several important areas,including economic growth rates. Based on the best regionaland international practices,this report concludes thatmainstreaming environmental considerations into sectoralpolicies rather than scaling-up the operations ofenvironmental agencies is the best way to prepare Guatemalaninstitutions for current environmental challenges and thoseit will encounter in the future. The report also emphasizesthe need to provide the right incentives to economic agents(e.g., promoting compliance through achievable requirementsbut with credible sanctions to violators, rather than tryingto change behavior by threatening with criminal charges thatare ultimately not enforced), and to engage civil society byimproving information and participation mechanisms.