Neoinstitutionalism provides analytical focus on how institutions evolve, while understanding such institutions as rules limiting individual conduct, as well as providing incentives for change. Diverse lines of institutional thought have contributed to the analysis of Development Theory and practice. This article analyzes the relationship between neoinstitutionalism, development, and the environment, and concludes that these interactions are limited by institutional inefficiency. In the case of Colombia, institutions work in favor of particular interests, rather than collective needs. Nevertheless, the possibility of territorial development exists if planning processes are managed to improve both formal and informal institutions.