SANDEE organized an Advanced Course in Household Economics and Natural Resource Management in Colombo, Sri Lanka from 16th - 27th June, 2003. Farm households represent the dominant type of decision-making units in rural areas. Policies directed at rural development and natural resource management have to consider the behavior of these rural households. By placing households at the center of policy analyses, decision-makers can focus on incentive structures. The course addressed issues such as: how can we model household decisions when households are producers and consumers of agricultural and resource products? How do households operate in situations of high population density, missing markets and resource degradation? How can policy makers create incentives for households to undertake sustainable actions given the limited number of available policy tools? The course was a combination of lectures on theory and empirical papers with practical exercises. Course faculties were: Prof. Stein Holden, Department of Economics and Social Sciences, Agricultural University of Norway and Mr. Jeetendra Aryal, Tribhuvan University and Agricultural University of Norway. Only SANDEE grantees and researchers participated in the course.