This report for 2004/05 looks at the drivers of environmental change, the ensuing pressures, the state of the environment, the impacts caused and the responses adopted. New evidence emerging from this report suggests that Uganda’s current pattern of development is unsustainable. Economic growth is being achieved by mining the country’s natural resource capital, particularly soil erosion caused largely by inappropriate crop husbandry, deforestation and livestock management practices. Futher, still this report attempts to put Uganda on the international scene by comparing its perfomance based on certain indices such as genuine savings, living planet and water scarcity. These indices as reported upon in various sections of the report reflect that Uganda performance is still acceptable on international standards. This report also recommends for urgent policy responses in order to have more effective environmental management.