This work is divided in three parts: (1) an assessment of the present state of performance in the management of the environment and the natural capital of the region; (2) the policies that are necessary to achieve high environmental performance with a focus on governance, multisector mainstreaming, the participation of the private sector, and social inclusion; and (3) a short section of conclusions. The study reviews the debate on trade offs between economic growth and the environment, showing that investing in physical infrastructure and economic development, while conserving the environment and natural capital, is a viable and smart sustainable development strategy.