This chapter focuses on four of the main policy challenges that rural areas face in Spain (based on the diagnostic of Chapter 1) and evaluates the extent to which these policy issues have been addressed by Spanish authorities at the national and regional level in the past, and in the present framework of the Law on Sustainable Development of Rural Areas. Section 3.1 deals with the demographic and social challenges, Section 3.2 focuses on the challenge of diversifying the rural economy and fostering the competitiveness of rural areas, Section 3.3 addresses the relationship between rural areas and urban areas, with particular attention to areas. Finally, Section 3.4 adresses the environmental role of rural areas, and the importance of building a sustainable rural economy.