The author would like to thank Gerard Bonnis, Nils-Axel Braathen, Jane Ellis, Brendan Gillespie, Ivan Hascic, Hiroshi Kobayashi, Tomoo Machiba, Krzysztof Michalak, Stephen Perkins, Bent Arne Saether, Tappei Tsutsumi, and Frederique Zegel for valuable comments on and inputs to earlier drafts. Special thanks go to Carla Bcrtuzzi and Sarah Sentier for statistical assistance, and to Beatrix De Koster and Shayne MacLachlan for editorial support. This paper also benefitted from discussions with officials of the Japanese government and with delegates to the OECD Working Party on Environmental Performance. The views expressed in this paper do not necessarily reflect those of the OECD and its member countries. Such a model should restore public finances and long-term growth while preserving environmental quality and ensuring a sustainable use of natural resources.