Hungary is undergoing both radical economic transformation and political change. Presently a number of challenges converge and compete simultaneously for attention and resources. Hungarian environmental policy and administration are part and parcel of these changes and the competing demands they make on the limited capacities of the institutions of governance. Improving institutional capacity is likely to be difficult since the issues involved are deeper than merely technical and administrative improvements. While democratisation, in many ways, makes improving the institutional capacity for managing environmental quality in Hungary more difficult, it may also be a prerequisite for it. In Hungary institutional capacity is generally in short supply. Consequently, the broader challenges and institutional needs of the nation are also a piece of the explanation of the problems of implementing environmental policy. A significant expansion of institutional capacity is required as part of any concerted effort to address environmental issues.