This staff sector assessment note accompanies the recently completed national environmental action plan for sustainable development (NEAP-SD), which, as an output of the Industrial Pollution Control Project in Algeria, focused on charting a new course for environmental management in the country, based on an objective assessment of past policy, and institutional failures, on a new consensus on the need for mainstreaming the environment into economic management, and sectoral policies, and, on the implementation of a priority action plan, fully integrated with the government three-year economic revival program. The social cost of environmental degradation is already quite significant, and will continue to increase if policies, institutional, and investment measures are not provided. The NEAP-SD serves as a vehicle for building bridges with non-governmental organizations, and donors, and enhance the prospects for improved coordination, as well as helping inform the ongoing process of Country Assistance Strategy (CAS). Recommendations suggest the use of high impact strategic lending, with contributions supporting water and wastewater, urban, and rural development, including natural resource management, incorporating environmental objectives, but focused on fundamental challenges that address public sector efficiency and governance, private sector development, and water management, through partnerships focused on flexible responsiveness, in an approach to integrate the environment into the Bank's instruments, building capacity, and strengthening environmental, and institutional assistance.