diff --git a/environment.yml b/environment.yml
index e298423..dcd5a5b 100644
--- a/environment.yml
+++ b/environment.yml
@@ -21,4 +21,5 @@ dependencies:
   - pip
   - pip:
       - pyscaffold
-      - sphinx_rtd_theme # to build docs locally
+      - sphinx_rtd_theme  # to build docs locally
+      - -e .[testing]  # install git checkout of PyScaffold in editable mode
diff --git a/src/pyscaffoldext/dsproject/templates/environment_yml.template b/src/pyscaffoldext/dsproject/templates/environment_yml.template
index c739228..cc09463 100644
--- a/src/pyscaffoldext/dsproject/templates/environment_yml.template
+++ b/src/pyscaffoldext/dsproject/templates/environment_yml.template
@@ -21,8 +21,10 @@ dependencies:
   - pytorch
   - yellowbrick
   - pip:
+     - -e .[testing]  # install git checkout of ${name} in editable mode
      # add here only pip-packages that are not available in conda/conda-forge! E.g.:
      - optuna
+
   # for development only (could also be kept in a separate environment file)
   - jupyterlab
   - pytest
diff --git a/src/pyscaffoldext/dsproject/templates/readme_md.template b/src/pyscaffoldext/dsproject/templates/readme_md.template
index b148887..0a6275e 100644
--- a/src/pyscaffoldext/dsproject/templates/readme_md.template
+++ b/src/pyscaffoldext/dsproject/templates/readme_md.template
@@ -18,23 +18,23 @@ In order to set up the necessary environment:
    ```
    conda activate ${name}
    ```
-3. install `${name}` with:
-   ```
-   python setup.py install # or `develop`
-   ```
+
+> **_NOTE:_**  The conda environment will have ${name} installed in editable mode.
+> Some changes, e.g. in `setup.cfg`, might require you to run `pip install -e .` again.
+
 
 Optional and needed only once after `git clone`:
 
-4. install several [pre-commit] git hooks with:
-   ```
+3. install several [pre-commit] git hooks with:
+   ```bash
    pre-commit install
    # You might also want to run `pre-commit autoupdate`
    ```
    and checkout the configuration under `.pre-commit-config.yaml`.
    The `-n, --no-verify` flag of `git commit` can be used to deactivate pre-commit hooks temporarily.
 
-5. install [nbstripout] git hooks to remove the output cells of committed notebooks with:
-   ```
+4. install [nbstripout] git hooks to remove the output cells of committed notebooks with:
+   ```bash
    nbstripout --install --attributes notebooks/.gitattributes
    ```
    This is useful to avoid large diffs due to plots in your notebooks.
@@ -49,12 +49,12 @@ Then take a look into the `scripts` and `notebooks` folders.
    in `setup.cfg` if you want to ship and install your package via `pip` later on.
 2. Create concrete dependencies as `environment.lock.yml` for the exact reproduction of your
    environment with:
-   ```
+   ```bash
    conda env export -n ${name} -f environment.lock.yml
    ```
    For multi-OS development, consider using `--no-builds` during the export.
 3. Update your current environment with respect to a new `environment.lock.yml` using:
-   ```
+   ```bash
    conda env update -f environment.lock.yml --prune
    ```
 ## Project Organization