To enhance the standard of living of the people, the Government of Sri Lanka made various efforts to improve the economy of the country, including undertaking of various development projects leading to higher economic growth. However, the accelerated development effort launched by the Government of Sri Lanka in the late 1970s had a significant impact on the island's environment. With continuing rapid progress in development activities, the protection and management of the environment became a major concern.

A law to incorporate and cover all aspects of environment was made for the first time in 1980. This is the national Environmental Act (NEA) No. 47 of 1980, the basic national decree for protection and management of the environment. The NEA established the Central Environmental Authority (CEA) as a policy making and coordinating body. This act was then amended in 1988 by Act No. 56 to transform CEA into enforcement and implementing agency.

Realizing the need for integrating environment, economic and social considerations with the planning and decision making process in a more formal manner, the Government of Sri Lanka decided to introduce Environmental Impact Assessment for development projects. In November 1982m the Cabinet of ministers decided to make EIA mandatory for "all" state and private sector "development projects" with effect from 1st January 1984. It was also decided that the year 1983 would be devoted to the preparation of comprehensive guidelines and procedures and for the training of officials of the relevant agencies in EIA.

In 1983, the Central Environmental Authority (CEA) initiated an Environmental Assessment Procedure Development Program. This program included the preparation of Guidelines on Environmental Assessment and the training of officials from the relevant agencies. These guidelines were reviewed at a high-level policy development seminar and accepted in principle.

In November 1983, the Cabinet of Ministers considered the inclusion of provision, in the amendments to the National Environmental Act (NEA) for Environmental Assessment of development projects. The cabinet also decided that until the Act was amended, Environmental Assessment should be mandatory form 1st January 1984 for projects identified by the CEA.

However, the legal provision for EIA in Sri Lanka was first included in the Coast Conservation Act No. 57 of 1981. These provisions were restricted to the Coastal Zone as defined by this Act, which leaves the identification of projects for EIA to the discretion of the Director, Coast Conservation. Thus Sri Lanka's first EIAs were prepared under this law. One of the earliest EIAs prepared under this Act, was that of the Trincomalee Coal Power Plant.

EIA was mandated island wide by the 1988 amendments to the National Environmental Act and CEA was assigned regulatory functions. Part IV C of the Amendment Act of 1988 mandated that CEA require "prescribed" development project proposals to be subjected to Environmental Impact Assessment, where adverse and beneficial impacts of the proposed projects on the environment would be identified together with measures to minimize such adverse impacts.

The Fauna and Flora (Protection) Ordinance No. 2 of 1937, as amended by the Fauna and Flora (Amendment) Act No. 49 of 1993, requires that any development activity of any description whatsoever proposed to be established within one mile of the boundary of any National Reserve1, should receive the prior written approval of the Director of Wildlife Conservation. The Ordinance as amended mandates that the project proponent should furnish an IEE of EIA report in terms of the National Environmental Act.