In this paper, we examine several channels through which environmental economics has affected the World Bank's development agenda. We also describe the evolution of environmental economics at the Bank. At the macro level, we examine the growing influence of resource and environmental accounting in the Bank's policy work. From the micro perspective, we consider the role of environmental valuation in project analysis, the assessment of environmental damage, and the development of innovative environmental policies based on insights from environmental economics. We also describe the influence of economic analysis on environmental resource allocation decisions in the World Bank and its affiliate, the Global Environment Facility. Throughout the paper, we document the growth, scope, and impact of the Bank's contribution to economic policy research on environmental issues.