This strategic environmental assessment(SEA) is a technical piece intended to assist in the currentand future identification of priority industrial pollutantsand economic instruments to minimize industrial waste. Thisindustrial sector SEA is one of six pieces of technicalsupport envisioned by the Himachal Pradesh (HP) inclusivegreen growth (IGG) development policy loan (DPL) to fillknowledge gaps and strengthen operational success of theDPL. The DPL acknowledges that industrial development is animportant economic driver within HP, and that suchdevelopment must be consistent with maintaining theintegrity of other natural resource assets on which humanhealth depend. The general objectives of the SEA study are:(i) to assist in identification of priority pollutants andindustries; (ii) to review existing institutional structuresthat address these pollutants; (iii) to identify andrecommend potential reform options through the introductionof new policy approaches; and (iv) to identify complementaryinstitutional support necessary to implement such a program.The SEA was undertaken from April to December 2013 based onsecondary data collection, existing literature, variousconsultative meetings with key stakeholders, and diagnosticanalyses of this information. The purpose of theconsultations was to discuss the findings, issues, andpreliminary directions suggested by the desk reviews, and toinitiate a work plan for amassing additional information.The SEA has included participatory approaches to ensure thatpresented policy changes are designed and implemented in away that is responsive to the different segments of HPsociety. This report is presented in three parts. Part oneforms a foundation for focusing subsequent diagnostic workby providing more extensive detail on the institutionalcontext, pollution situation, health and environmentallinkages, and opportunities for using economic instruments.Part two performs additional diagnostic analyses to informthe core recommendations relating to options for neweconomic instruments, institutional reforms, and capacitybuilding; these recommendations are presented in part three.