Cities, which have emerged in regional areas, perform catalyst functions of the development of entire region. Taking into account the production concentration and specialization, population density and more modern infrastructure, urban land, labor and other production resources are used more efficiently if compared to rural areas. Interaction between urban and rural development is included in the study because the resources necessary for urban development, mainly, land and labor, are attracted from the rural areas in return for new jobs and modern social infrastructure. Ecology is an important aspect of this development interaction. The rural areas, in particular, its fertile soils, its forests and waters largely absorb CO2 - the most important gas that causes greenhouse effect and amortizes other adverse effects of the city on the environment. In the age of globalization of economic development and ecological problems, it is important for Latvia to facilitate balanced urban-rural interaction between socio-economic and ecological context of the development in each region in accordance with sustainable development principles.