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The effectiveness of command-and-control regulation has often been questioned in dealing with environmental problems. The situations seem to be more complicated when local communities are involved than when individuals or firms are so. Whereas the effectiveness of regulation is not so satisfactory, the behavior of the residents who reside in the regulated communities are excessively restricted. Most community-based environmental governance solutions are not yet institutionalized so that they are mostly dependent upon the voluntary activities of residents. Environmental agreements which have been frequently used in European countries and the U.S. are more institutionalized but applied only to firms. This study, therefore, proposes that the government should prescribe the standards for designating and renewing an environmental special district. Where the governmental standards are met by self-governed efforts, governmental regulation can be lessened or withdrawn. It is expected that the institution of environmental special districts will be effective particularly in community-based environmental management.