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AbstractIn recent years concern over environmental issues have moved high up the political agenda. This has accelerated particularly in the run up to the 1992 UN Conference on Environment and Development. Two sets of concerns have dominated attention: the problem of degrading environments within developing countries and global issues such as climate change and ozone depletion. The prime focus of attention in the developing countries has traditionally been on the former. Concerns over the latter originated primarily in the industrialised world but the issue is now recognised to have important implications also for the developing countries. New aid mechanisms are being formed to assist these countries address global environmental issues. This paper discusses economic approaches to assessing environmental impacts and attempts to examine the trade‐offs which developing countries face in addressing national as compared international environmental problems.