In this paper an endogenous growth model is analyzed which takes account of environmental deterioration and abatement. The environment plays a role both in production and welfare. It is common practice to solve growth models by looking at a balanced growth solution, which is often associated withsustainable development. We derive the conditions under which sustainable development is feasible. Furthermore, the conditions for optimal balancedgrowth are derived. Finally, some comparative statics of the balanced growth solutions are discussed and a numerical example is given to illustrate themodel and to provide further insight.