Scenarios are possible future states of the world that represent alternative plausible conditions under different assumptions. Often, scenarios are developed in a context relevant to stakeholders involved in their applications since the evaluation of scenario outcomes and implications can enhance decision-making activities. This paper reviews the state-of-the-art of scenario development and proposes a formal approach to scenario development in environmental decision-making. The discussion of current issues in scenario studies includes advantages and obstacles in utilizing a formal scenario development framework, and the different forms of uncertainty inherent in scenario development, as well as how they should be treated. An appendix for common scenario terminology has been attached for clarity. Major recommendations for future research in this area include proper consideration of uncertainty in scenario studies in particular in relation to stakeholder relevant information, construction of scenarios that are more diverse in nature, and sharing of information and resources among the scenario development research community.