This report is the first step in aprocess toward using environmental damage cost assessmentsfor priority setting and as an instrument for integratingenvironmental issues into economic and social development.The report provides estimates of damage cost for severalareas of the environment: air, water, land and forests, andwaste disposal. The estimates should be considered as ordersof magnitude and a range is provided to indicate the levelof uncertainty. As areas of priority are identified, furtheranalysis will be required for more accurate estimates. Dueto data limitations, the damage cost of environmentaldegradation has not been estimated in several areas:industrial, hazardous, and hospital waste disposal;unsanitary landfills; degradation of natural ecosystems andbiodiversity; and groundwater resource degradation andover-extraction. In addition and due to the complexity ofthe problem, the report only partially captures damageresulting from soil degradation. The report points t theneed to further assess and quantify current and potentialfuture damage costs related to those impacts.