Background Since the First European Conference on Sustainable Cities & Towns, which took place in Aalborg, Denmark in 1994, over 2000 European cities and towns have signed the Charter of European Cities and Towns towards Sustainability. Signatories of the Aalborg Charter pledge that they will “seek to establish new environmental budgeting systems which allow for the management of our natural resources as economically as our artificial resource, 'money'” (Aalborg Charter, Part 1.14). The ecoBudget concept is a direct response to this intent. As with financial budgets, ecoBudget applies an annual cycle, which follows the customary budgeting procedures of local governments, and includes two instances of ratification by the city council. This gives the process the political legitimacy and support necessary for success. It is this systematic and periodic involvement of the political level that distinguishes ecoBudget from other environmental management systems (EMS). Furthermore, unlike most EMS used by local authorities, ecoBudget seeks to cover not only the municipality’s administration or in a few of its functions or facilities, but its community and entire territory. Objectives The original ecoBudget system was developed by ICLEI-Europe as ‘ökoBudget’ and tested in a German pilot project from 1995 – 2000. The LIFE co-funded European ecoBudget project sought to further develop and adjust the original concept, so as to demonstrate the system’s applicability and suitability for urban and rural local governments of different sizes in all Member States. The project was coordinated by the Municipality of Växjö in Sweden, with the technical support of ICLEI, and with the cities of Dresden and Heidelberg from the German pilot project, as well as the Environmental Protection Agency for the Emilia Romagna Region in Italy, as observers. The municipalities implementing the project were Amaroussion and Kalithea (Greece), Bologna and Ferrara (Italy), Lewes (UK) and Växjö itself. Results The six partner municipalities set up local implementation teams that were trained at a series of workshops and field visits by experts from ICLEI. All prepared an environmental ‘master budget’, including 7 to 20 environmental indicators and long-term and short-term targets. This was ratified by all city and district councils, along with the ‘budget balances’ at the end of the year. The full methodology applied is described in the “ecoBudget Guide”, a manual published in hardcopy and online (http://www.vaxjo.se/vaxjowww/uppskickadefiler/3199.pdf). The project proved that ecoBUDGET could be adapted to the specific ecological, political and economic contexts of the participating municipalities, and was flexible enough to integrate diverse existing environmental instruments. Växjö, for example sought to combine it with its financial budget, Bologna coupled it to its strategic environmental assessment VALSAT (Valoración de Sostenibilidad Ambiental y Territorial), and Amaroussion chose to implement both complimentary systems ecoBudget, with its political perspective and community-wide approach, and the EC’s Eco-management and Audit Scheme (EMAS), which is more technical and introspective in its application. All partner municipalities have shown shifts towards a decrease in natural resource consumption. The system’s reporting mechanisms has greatly improved accountability and transparency, and made visible where set targets were not been meet, thereby enabling political and public discussion of where performance needs to be improved. The project successfully demonstrated the potential of ecoBudget for European local authorities from different financial, organisational and environmental contexts, and the methodology is now ready for a wider application in Europe and beyond. As part of a Europe Aid project, the cities of Växjö and Bologna are currently assisting the transfer of the methodology to two local governments in Asia: the Guntur Municipal Corporation (India) and the Province of Bohol (Philippines). The goal is to adapt ecoBudget to the needs of local governments in the region and develop a model environmental management system for Asian cities by the year 2007.