Australia's transition to the 21st century has been marked by an extended period of economic prosperity unmatched for several decades, but one in which a series of question marks are being raised in three principal areas: in relation to the environment, the social well-being of the population, and the future path of economic development. The first concern, which is of primary interest in this Research report, relates to the physical environment of cities and their surrounding regions, and the range of pressures exerted by population and human activity. The Research report begins by noting the increasing divergence of the prime indicator of national economic performance---gross domestic product (GDP)---from the Genuine Progress Indicator (GPI). GPI is a new experimental measure of sustainable development that accommodates factors currently unaccounted for in GDP, such as income distribution, value of household work, cost of unemployment, and various other social and environmental costs. The divergence of these two indicators in recent decades suggests that Australia's growth has been heavily dependent on the draw-down of the nation's stocks of capital assets (its infrastructure), its human and social capital, and its natural capital (Hamilton 1997). The pressures of Australia's consumption are becoming increasingly obvious. The 1996 SoE Research report on Human Settlements highlighted several issues of concern. Australia's major cities and coastal towns were absorbing most of the nation's population growth, placing pressure on natural environments, productive agricultural land, water resources, urban airsheds, and sewage and waste disposal systems. At the same time, many inland towns were declining in population and economic well-being, thereby compromising their capacity to manage or rehabilitate their immediate environment. Remote Indigenous communities were found to be suffering from critically low levels of social amenity, inadequate housing, and poor waste treatment and water supply systems, and presented severe health problems. In 2001, the areas of focus are: Future population; Coastal belt; Cities versus country; Re-urbanisation versus suburbanisation; Density of development; Resident versus visitor populations; Indigenous settlement; Per capita consumption; Greenhouse; Material consumption; Energy consumption; Water availability and use; Land, water, food, air and noise quality; Effectiveness of urban infrastructure networks; Human health and well-being; Waste recycling and reuse; Urban planning and design; and the patchiness of prosperity.