Long-range economic development in Central America will depend in large part on production of indigenous mineral, energy, and water resources and on mitigation of the disastrous effects of geologic and hydrologic hazards such as landslides, earthquakes, volcanic eruptions, and floods. The region has six world-class metal mines at present as well as additional evidence of widespread mineralization. Systematic investigations using modern mineral exploration techniques should reveal more mineral deposits suitable for development. Widespread evidence of lignite and geothermal resources suggests that intensive studies could identify producible energy sources in most Central American countries. Water supply and water quality vary greatly from country to country. Local problems of ground- and surface-water availability and of contamination create a need for systematic programs to provide better hydrologic data, capital improvements, and management. Disastrous earthquakes have destroyed or severely damaged many cities in Central America. Volcanic eruptions, landslides, mudflows, and floods have devastated most of the Pacific side of Central America at one time or another. A regional approach to earthquake, volcano, and flood-risk analysis and monitoring, using modern technology and concepts, would provide the facilities and means for acquiring knowledge necessary to reduce future losses. All Central American countries need to strengthen institutions and programs dealing with earth and water resources and natural hazards. Some of these needs may be satisfied through existing or pending projects and technical and economic assistance from U.S. or other sources. The need for a comprehensive study of the natural resources of Central America and the requirements for their development is evident. The U.S. Caribbean Basin Initiative offers both an excellent opportunity for a regional approach to these pervasive problems and an opportunity for international cooperation.