This paper aims at explaining the role and importance of the evolution of institutions for sustainable agri-environments during the transition process by referring to agrienvironmental problems faced in Central and Eastern European countries. A central question therefore is whether the required institutional arrangements for achieving sustainability in the area of agri-environmental resource management can be built more easily in periods of transition as they fill institutional gaps, or whether processes of transition make institution building a more difficult and far more time consuming task than previously thought. Above all, we want to find out, how these two processes of institution building at different scales affect the sustainable management of resources such as water and biodiversity in agriculture. It will become clear that the agri-environmental problem areas faced during transition are complex and dynamic and require adequate institutions both by political design and from the grassroots, to be developed by the respective actors involved. Transition from centrally planned to pluralistic systems has to be considered as a particular and in some respect nontypical process of institutional change. Popular theories of institutional change do not necessarily apply. The privatisation experience from many CEE countries will serve as an example. Finally, we will emphasis the problem of missing or insufficient interaction between political actors or agencies and people in CEE countries. Substantial investments into social and human capital, particularly regarding informal institutions are needed for institutions of sustainability to evolve.