The universal characteristic of ecoBUDGET is the annual or bi-annual repetition of the budget cycle. ecoBUDGET follows the same principles as the financial budget: the main element is the preparation of an environmental master budget, in which natural resources (such as air, water, raw materials, climate stability, etc.) are described through physical indicators. For each indicator (there are normally five to fifteen) reference values, previous year values, and short-term and long-term targets are provided. The environmental master budget is then voted on and adopted by the city council. The targets (budget values) thus become politically binding, giving the mandate to the local administration to undertake measures to meet those targets. Normally the budget also describes who is responsible for which part of the budget, i.e. the targets and the measures.

To monitor and control the budget, accounts are set up in order to register the environmental spending and to compare it with the available environmental resources. At the end of the year the budget balance shows whether the targets have been met or not, and the reasons for success or failure, which are then reported to the community. The figure below provides a schematic representation of an ideal ecoBUDGET annual cycle: