This research paper analyzes the trends in expenditure pattern of Navi Mumbai Municipal Corporation (NMMC)- an urban local body in the state of Marashtra, India in the context of increased decentralization of the role and responsibilities for the local governments that emerge from the 74th Constitutional Amendment Act passed in 1992. The thrust of the paper is on evaluating the trends in proenvironment revenue and capital expenditures of NMMC during the six year period 2004-05 to 2009-10. The research paper also makes an important contribution in terms of examining the effectiveness of these expenditures in the light of select service delivery indicators. Apart from measuring the percentage changes in various pro- environment expenditure heads and per capita pro-environment revenue and capital expenditures, the study has also performed correlation analysis encompassing variables like pro-environment revenue and capital expenditures, population size and Environment Quality Index. The findings of this paper have relevant policy implications for sustainable urban development.