Human capital formation has been chosen as the initial focal point of this new IIASA population-development-environment case study on Egypt. With its population still likely to double and its water resources severely restricted, Egypt faces formidable population- and environment-related challenges. The government has an explicit population policy aimed at bringing the fertility rate down to replacement level by 2017. With its options for agricultural development severely limited, the future livelihood of this rapidly growing population can only be secured through rapid development in the industrial and service sectors. For both sectors, human capital development is a necessary prerequisite for success. Of course, such development needs to be complemented by the right investment and trade policies. But without a sufficiently well-educated population, Egypt will not be able to compete in the global service and industry markets. The study explores the human capital dimension at the aggregate level for the whole of Egypt and at the governorate level, distinguishing between 21 governorates and the Frontier Region. For each of the governorates a multi-state population projection model is defined that differentiates the population by age, sex, and level of education. The scenarios demonstrate the momentum of educational development: The challenges will be important for those governorates where past investments in education have been insufficient, especially for the female population, and where the working-age population will increase tremendously, such as in Fayoum, Menia, Assyout, and Suhag. The projections point to the necessity of major structural changes in the development of Egyp