ansparency and predictability of the institutional environment reduces transaction costs and defines the incentive structures in; the economy for the emergence of competitive markets. The efficacy of the institutional mechanisms and the interaction between them is dependent to a large degree on: (a) the powers and functions delegated to each agency with well-defined tasks; (b) the scope of the tasks specified; (c) the resources, both financial and human, available for executing the tasks; and (d) the degree of commitment and political will exhibited by the leadership. In the present context, given the segmented and compartmentalized structures of the governments in the region, designing institutional mechanisms which emphasize a cross-sectoral approach to the integration of environmental concerns with economic policy-making processes is, perhaps, one of the most difficult challenges facing policy makers.
The Brundtland Commission emphasized in its report that "governments must begin now to make the key national, economic and sectoral agencies directly responsible and accountable for ensuring that their policies, programmes and budgets support development that is economically and ecologically sustainable" (World Commission on Environment and Development, p. 20). Agenda 21 of the Rio Conference reiterated it even more forcefully, stating that "an adjustment or even a fundamental reshaping of decision-making, in the light of country-specific conditions, may be necessary if environment and development is to be put at the centre of economic and political decision-making" (United Nations, p. 65). It called, inter area, for ensuring the integration of economic, social and environmental considerations in decision-making at all levels, a cross-sectoral approach to planning, the adoption of integrated management systems, the strengthening of data collection, the adoption of national strategies for sustainable development, and the enhancement of training, education and research for capacity-building.
Almost all the countries in the ESCAP region have set up government institutions dealing with environment matters, many of them at the national level headed by a minister. However, an apparent major weakness of the current institutional framework is the lack of horizontal and vertical coordination, resulting in dispersed sector-specific policy orientations and concomitant difficulties in trying to harmonize diverse national, local and sectoral interests. In addition, the integration of environmental considerations into the work and mandates of various macroeconomic and sectoral ministries has been hampered by the fragmentation of concerns and responsibilities, restricted decision-making processes which often exclude local level authorities, and inadequate interagency cooperation. For example, export incentives are often devised without full consideration of the impact of increased exports on the domestic natural resource situation. Another example is the setting of pollution norms of various types on a national level, yet making local level institutions responsible for their enforcement, frequently without sufficient financial or human resources. The capacity of the various levels of government personnel to analyze and address environment-related issues also varies widely, with most local authorities having a very limited ability to make and enforce policy decisions. In addition, the various methods used for assessing the environmental problems tend to be devised and implemented in an isolated and diffused manner with negligible intra-country, or even intersectoral, exchanges of experiences.
Despite the importance accorded to sustainable development by the governments of the region, little research has been undertaken on the effectiveness of institutions and administrative structures created for that purpose in these countries. In order to fill the gap in the existing knowledge about institutional mechanisms for sustainable development, ESCAP executed a project entitled "Integrating environmental considerations into economic policy-mak