Abstract:The consensus reached in the literature on development is that an exclusive focus on income per capita neglects distributional issues. Therefore, there is a need to take a more comprehensive look at well-being than personal income suggests. An extended capabilities approach, in this regard, is an improvement over income based approaches as it offers a possibility to explore questions of justice, equity, empowerment, environment, the role of institutions and power relations by shifting the focus of development analysis from personal income to non-monetary aspects of well-being. However, its analysis of institutions remains problematic as it falls short of taking into account the social structure within which the institutions are positioned. The paper attempts to give a broader understanding of institutions and their role in determining the policy choice and outcomes. The analysis mainly focuses on the environmental component of development as a linkage between development policies and the nature of the social structure. The dynamic relationship between environmental policies and social structure is analyzed by a framework exploring how the social structure affects the choice of policy and how the policy in turn shapes the social structure via its effect on power relations. The theoretical argument is illustrated by using gender norms of resource access as an example.